Ethereum, the second-largest cryptocurrency by market capitalization, has been struggling to impress as it hovers around the $2,000 mark. This marks the first occasion since the asset last traded within this range—between March 9th and May 8th, 2025, a 60-day period—that the price has returned to this zone. The revisit seems connected to the overall market’s subdued framework and absence of strong conviction. Current conditions exhibit parallels with earlier cycles. However, while indicators suggest that a cool-down phase may be nearing completion, the market’s response remains decidedly ambiguous. The potential for additional drawdown remains on the table. Recent analysis reveals that ETH is currently in a cool-down phase, a period historically linked to potential price rebounds across various cycles. This phase is assessed through the Market Temperature metric, which integrates three essential indicators: Market Value to Realized Value Z-score, Net Unrealized Profit/Loss, and the Realized Value to Transaction Ratio. The metric signals a cool-down phase when it falls to the 0 level or lower. As this time, Ethereum’s Market Temperature was positioned just above the zero mark, indicating that although the market is experiencing a cooling phase, additional drawdown may still take place before a sustainable recovery can be anticipated. On X, Alphratal shared insights regarding the implications of trading within this zone: “These zones reflect periods where unrealized profits are reduced, valuation becomes more balanced, and emotional excess fades from the market.”
Historically, these conditions have served as catalysts for growth. However, recoveries seldom happen right away. Markets frequently need a period to restore confidence before a rally takes shape. In the meantime, ETH might experience a decline or persist in fluctuating within a narrow range that limits upward momentum. Demand is evidently subdued, heightening the chances that ETH will persist in trading close to the lower end of its range. Market sentiment continues to exhibit caution among both institutional and spot traders. In the latest developments on the institutional side, U.S. Spot Ethereum exchange-traded funds experienced one of their weakest inflow days since launch, with only $10.26 million in ETH taken from the market, as reported. The positive inflow may be seen as somewhat encouraging, yet the scale of it underscores that bullish sentiment is still tenuous.
The two trading sessions leading up to the latest reading saw a total of $242.2 million in outflows combined. Throughout February, there has been just one significant positive inflow session, marked by an entry of $57.05 million into the market. This figure is notably lower than the average net inflow of $108.19 million recorded during periods of heightened demand. The spot market activity reflects this weakness. As of the latest data, Exchange Netflows indicated that around $28 million in Ethereum has been acquired from the market. Nonetheless, the previous session noted $23 million in net selling pressure, which partially countered that demand. The ongoing absence of robust buying interest remains a significant factor affecting price movement, hindering Ethereum’s potential to take advantage of its cool-down phase — a time generally linked to structural recovery. In a recent report, AMBCrypto emphasized the evolving supply dynamics on Ethereum exchanges. Exchange reserves are on a steady decline, accompanied by a drop in ETH depositing addresses and transaction counts. In theory, a reduced exchange supply frequently bolsters bullish setups by constraining sell-side liquidity. Nonetheless, a mere contraction in supply is insufficient to maintain a rally.
In the absence of robust demand and a shift in sentiment, the potential for price expansion continues to be limited. Institutional flows are still subdued, while spot traders exhibit ongoing reluctance. For Ethereum to embark on a sustained bullish trajectory, several conditions need to align. A cool-down phase by itself is inadequate. The market is in need of heightened demand inflows, a boost in sentiment, and a revival of institutional involvement. Until those elements converge, ETH could stay within a limited range—or face additional downside risks before a significant recovery takes place. Ethereum has approached the $2,000 mark for the first time following its consolidation phase from March to May 2025. In a recent session, U.S. Spot ETH ETFs saw inflows of only $10.26 million, marking one of the weakest days since their launch.