While Ethereum protocol boasts of promising updates, ETH keeps struggling below $3,700. Sharp downtick in social metrics adds advantage for the bears, yet fundamentals spur optimism in Ether’s prospects. But which factors would be leading in the market sentiment? 

Data from Glassnode indicates that the amount of Ether (ETH) held on exchanges has reached its lowest point in eight years. 

While this may indicate a decreased speculative interest in Ether, taking place due to post-ETF approval market shock, this marks a strong holding tendency. According to the IntoTheBlock’s data, 89% of Ethereum holders are in profit at the current price, which is a strong indicator of a healthy market. 

The data also reveals that Ethereum is mainly held by whales, with 51% of the asset cited to be concentrated on the large holders’ wallets. 

What is more, CoinShares recently reported that Ether investment products saw a total inflow of $69 million for the week, hitting the three-month record.

This correlates with a notable increase in a volume of transactions exceeding $100k, which proves the institutional and large-scale investor optimism on the long-term Ethereum perspectives due to its exchange-traded funds’ (ETFs) approval. 

By contrast, overall Ethereum’s sentiment has registered a sharp decline since the beginning of the month. Santiment’s data reveals that Ether’s weighted sentiment indicates a negative rate after its surge in the end of May – just around the ETF-fueled spike. 

Additionally, an analysis of the social volume showed downticks corresponding to the decreases in weighted sentiment. 

Despite the weak sentiment, Ethereum still sees a positive new address momentum. At the writing time, the number of new addresses exceeds 105,000.

As per Ether’s daily chart, the asset faced heightened selling activity after a short period of consolidation near the $4,000 crucial resistance. This highlights the price level as a key point for short positions. 

Nonetheless, there is a significant support zone ahead, including the 100-day moving average at $3,431.05 and the 0.5 Fibonacci retracement level at $3,419. This suggests that the current price action may continue its bearish retracement in the short term, with the 100-day moving average and the 0.5 Fib level acting as primary support for buyers.

The 4-hour chart indicates a strong sideway movement for Ethereum. According to the graph, the aforementioned consolidation in the $4,000 area has formed a head and shoulders pattern, indicating a lack of bullish momentum and an increase in supply. Consequently, this pattern may signalise an eventual bearish reversal, especially with breaking below the neckline of the formation.

The seller dominance is also marked by a bearish divergence between the relative strength index (RSI) and the price movement. 

Currently, the price is at a critical support level of around $3.6K. If sellers manage to breach this pivotal level, continuing the bearish trend is the most likely outcome.

Controversial Ethereum updates only emphasize the vagueness of the coin’s trend. While traders received a perfect opportunity to buy, they should closely monitor the upcoming Federal Reserve’s updates on the interest rates in the US – a crucial factor of influence towards the cryptocurrency market.