Ethereum ends October under pressure, dropping below the key $4,000 level for the first time in three months. The market is rife with debate: investors face a dilemma — should they bet against the second-largest cryptocurrency by market cap or, on the contrary, prepare for a new surge in November?
Institutional funds lose interest
Analysts at 10x Research believe that in the coming month, Ethereum may show weaker performance compared to Bitcoin. The company recommends using ETH as a hedging tool for short positions, pointing to the weakening of its “institutional narrative.”
Previously, Ethereum was seen as a digital “treasury” — an asset that corporations could hold on their balance sheets for long-term growth. This image was fueled in the summer by large accumulation strategies, such as BitMine, which bought ETH at cost and sold it to retail with a premium.
However, according to 10x Research, this mechanism has broken down, and institutional players’ interest is gradually fading.
“The market doesn’t lose faith instantly. It disappears quietly when new capital doesn’t come in,” the report says.
“Institutional funds are in no hurry to support Ethereum, and options show that big players are taking defensive positions.”
The situation is exacerbated by outflows from spot ETFs. According to SoSoValue, in the third and fourth weeks of October, $311.8 million and $243.9 million were withdrawn from Ethereum funds, respectively. Analyst Ted Pillows clarified that BlackRock sold $118 million worth of ETH in just one day, adding:
“The sales volumes speak for themselves.”
Bearish signals on the charts
From a technical point of view, a bearish crossover of moving averages is forming on the Ethereum chart, a signal that often indicates a possible continuation of the decline. Analysts remind that the last time such a pattern appeared was when the ETH price collapsed from $3,800 to $1,400.
However, not all experts share this pessimism. Some analysts believe that the market is simply going through a “shakeout” phase before the next rally.
Contradiction between sentiment and data
Researchers at Santiment note that during the drop to $3,700, traders once again began to massively open short positions. Historically, such spikes in shorts have often preceded sharp price rebounds.
“When the market is overloaded with longs, a correction follows. When shorts dominate, the probability of growth increases,” analysts explain.
Derivative funding rates confirm this pattern. On most exchanges, they have turned negative — a sign that traders are betting against growth. Such a structure usually creates the basis for a “short squeeze” and the formation of a new upward impulse.
Strong fundamental indicators
Despite weak price dynamics, the Ethereum network is showing record activity. The Ecosystem Daily Activity index reached an all-time high in October, indicating steady growth in user engagement.
According to CryptoOnchain analyst, this very factor makes Ethereum’s fundamentals much stronger than the charts suggest:
“We see a high level of real network usage, not just speculative traffic. This is a signal that the market remains fundamentally healthy.”
The growth in activity is confirmed by an increase in the number of transactions, as well as demand for tokens within the ecosystem. According to experts, this very factor could become the foundation for a price recovery in November.
Balance between risk and potential
Thus, the picture for Ethereum remains ambiguous. On the one hand — institutional outflows and weak technical signals. On the other — record network activity and derivatives data pointing to the possibility of a short-term reversal.
Much now depends on sentiment at the start of November. If Bitcoin holds above $110,000 and the Fed gives markets a pause in tightening policy, Ethereum could quickly recoup some losses and return to growth.
Read more: Bitcoin forms a bullish pattern after a sharp drop to $106,000
