Ethereum News Today: Ethereum's Liquidity Showdown: Bulls Defend $3,100 as Bears Eye Deeper Declines

Ethereum (ETH) traders are closely watching key liquidity zones as the asset struggles to regain momentum near $3,100, with analysts divided on whether the recent pullback signals a potential rebound or deeper bearish pressure. The cryptocurrency has lost 11% over seven days, trading at around $3,100, while broader market sentiment remains cautious according to data amid waning ETF demand and shifting Federal Reserve policy expectations.

Technical analysts highlight a critical liquidity range between $2,904 and $2,916 as a potential "buy zone" for ETH, according to Hyblock Capital. The firm noted that deeper liquidity flushes may be required to establish a durable base, with the next key support cluster under $3,000 currently thinning. Altcoin Vector added that Ethereum's liquidity structure has "fully reset," a pattern historically observed before major market bottoms. However, the platform warned that liquidity rebuilds often precede multi-week consolidation phases rather than immediate recoveries, with prolonged delays increasing downside risks.

On the bearish side, TradingView analysts emphasized that ETH must reclaim $3,450 to reverse its current bearish structure. Below that level, they noted, the price is likely to face sharp but short-lived declines driven by stop-loss orders, with the largest liquidity imbalance at $3,800–$3,900. Meanwhile, Crypto Patel identified a Fair Value Gap (FVG) between $3,270 and $3,360 as a potential short-term target, suggesting a 14–15% rebound is possible if the current structure holds. Analyst Lennaert Snyder echoed this, noting ETH's rejection at $3,200 resistance and a test of $3,350 if support near $2,990 holds.

Broader market dynamics are also weighing on Ethereum. U.S. Ethereum ETFs recorded $74 million in outflows on Tuesday, extending a bearish streak that has reduced net assets to $19.6 billion from $12.88 billion in October according to data. The decline aligns with broader crypto market weakness, as Bitcoin (BTC) ETFs saw $373 million in outflows, pushing their net assets to $122.29 billion. SoSoValue data shows that ETF outflows have eroded investor confidence, with cumulative inflows for ETH ETFs at $12.88 billion since launch.

Institutional liquidity providers are also cautious. BlackRock led $523 million in Bitcoin ETF outflows in November, while two major crypto market makers face financial deficits, according to Bitmine Immersion's Tom Lee according to data. Smart money traders on Nansen's platform have added $5.7 million in short positions over the past 24 hours, signaling a shift toward downside bets according to data.

Despite the bearish backdrop, some optimism exists. Ethereum's Account Abstraction team outlined plans to unify Layer 2 (L2) networks via the Ethereum Improvement Layer (EIL), aiming to streamline cross-chain transactions and reduce bridge risks according to data. The initiative, built on ERC-4337 account abstraction, could improve user experience and drive adoption, though price action remains fragile. ETH's Relative Strength Index (RSI) has ticked upward from oversold territory, but bulls must defend $3,100 to avoid a test of the $2,850 support level according to data.

The Federal Reserve's policy trajectory adds another layer of uncertainty. Markets now price in a 46% chance of a December rate cut, down sharply from 93.7% in October, according to CME Group's FedWatch tool. Analysts warn that prolonged liquidity tightening could extend ETH's consolidation phase, with the FOMC meeting in December a key event to watch according to data.