Cryptocurrencies Pare Gains as Sentiment Remains Fragile

Key Takeaways:

*Bitcoin slipped back below $114,000 and Ethereum weakened toward $4,000 as Asian trading erased New York session gains.

*Long position unwinding and a Crypto Fear & Greed Index reading of 45 reflect ongoing caution, though easing liquidation volumes suggest selling pressure may be stabilizing.

*Slowing ETF outflows hint at tentative institutional interest, while upcoming U.S. GDP and PCE data will be critical for shaping risk appetite and crypto’s near-term direction.

Market Summary:

Cryptocurrencies gave up most of their New York session gains during Asian trading, with Bitcoin failing to hold above $114,000 and Ethereum facing increased selling pressure below the $4,200 level. The reversal highlights ongoing fragility in digital asset markets, despite a temporary recovery attempt fueled by short covering and technical buying.

Ethereum faced particular weakness, declining toward the psychologically significant $4,000 level as traders continued to unwind long positions following recent market weakness. While liquidation volumes have eased from their peaks, market sentiment remains cautious, with the Crypto Fear and Greed Index hovering near 45—indicating a tilt toward fear that continues to cap upward momentum.

A potentially constructive development emerged in institutional flows, however, with recent data showing cryptocurrency ETFs experiencing a moderation in outflows. This suggests institutional investors may be beginning to view current levels as attractive entry points following the recent correction, though conviction remains tentative.

Broader market attention is now focused on key U.S. economic releases, including today’s GDP data and Friday’s PCE inflation report—the Federal Reserve’s preferred inflation gauge. A softer PCE reading could revive expectations for accommodative monetary policy, potentially serving as a catalyst for renewed risk appetite across cryptocurrency markets. Conversely, stronger-than-expected data may extend the current period of consolidation or pressure.

The near-term trajectory for digital assets will likely depend on whether institutional inflows can offset retail caution and whether macroeconomic conditions support a favorable risk environment. A hold above $4,000 for Ethereum and $110,000 for Bitcoin would be technically important to prevent another leg down.

Technical Analysis 

ETH, H4

Ethereum is testing a crucial psychological and technical support level at $4,000, having failed to sustain a brief breakout above its recent consolidation range. The cryptocurrency quickly relinquished its gains from the previous session, signaling ongoing weakness and increasing the risk of a further breakdown.

A sustained move below the $4,000 level would represent a significant deterioration in market structure, likely triggering additional technical selling and opening the path toward the next key support zone near $3,800. The inability to maintain upward momentum—even during temporary rallies—suggests underlying bearish pressure remains dominant.

Momentum indicators continue to reflect this negative bias. The Relative Strength Index remains lodged in oversold territory, indicating persistent selling pressure, while the Moving Average Convergence Divergence is trending lower beneath its zero line, confirming that bearish momentum is accelerating.

Resistance Levels: 4,326.00, 4,821.25

Support Levels: 3,867.00, 3,403.50