Ethereum is unlikely to regain $3,900 as sentiment and demand fall.

Ether (ETH) has fallen 11% over the past week, despite attempts to return to the $3,400 level at present. This decline coincides with a 4% adjustment of the Nasdaq index, wiping out the growth gains of the previous two weeks. Currently, investors are debating whether ETH still has a chance to reclaim the $3,900 level.

ETH price chart | Source: CoinphotonConcerns about global economic growth prospects have increased after consumer-focused businesses reported disappointing quarterly earnings, along with new worries about overvaluation in the artificial intelligence sector. Notably, the longest government shutdown in U.S. history continues to negatively impact the economy.

Annual premium for monthly ETH futures contracts | Source: laevitas.chIn the derivatives market, Ether futures are currently trading at a premium of over 4% compared to the spot market, unchanged from last week. This data reflects investors' cautious sentiment towards bullish positions, although it has not reached alarming levels below 0%.

In a normal market context, this spread typically ranges from 5% to 10% to compensate for the longer payment processing time.

Market sentiment has become more unstable as expectations for the U.S. consumer confidence index have fallen to a record low, according to a survey by the University of Michigan. The November data, released on Friday, is the second lowest since 1978, primarily due to the government shutdown in U.S. spending, according to an AP report.

ETH/USD (green) compared to Total cryptocurrency market capitalization (red) | Source: TradingViewOne reason for investors' disappointment is that ETH fell 4% in weekly performance compared to the market. This indicates that in addition to macro risks, there are other factors making traders more cautious about Ethereum.

Total value locked (TVL) on Ethereum, USD | Source: DefiLlamaTotal value locked (TVL) on the Ethereum network has decreased to $74 billion—its lowest level since July—corresponding to a 24% decrease over the past 30 days. Investors were also surprised when Ethereum's leading decentralized finance (DeFi) platform, Balancer v2, was exploited for a security vulnerability with damages of up to $120 million earlier this week.

Monthly revenue of Ethereum DApps, USD | Source: DefiLlama## Revenue of Ethereum DApps fall in October

Revenue from decentralized applications (DApps) on Ethereum also recorded a decline in October, reaching $80.7 million—a fall of 18% compared to the previous month. This downward trend is particularly concerning for ETH investors, as low on-chain activity will reduce the staking yield of this coin.

The design of Ethereum includes a mechanism to burn ETH during periods of high blockchain data processing demand, helping to balance network activity and supply.

The address and transactions are active, 7 days | Source: NansenHowever, the first week of November has seen positive signals for Ethereum compared to rival blockchains, with the number of active addresses increasing by 5% and the number of transactions increasing by 2% over the course of 7 days. In contrast, both Tron and BNB Chain recorded a fall in on-chain activity.

The daily trading volume of Ethereum spot trading funds, USD | Source: CoinGlassThe sentiment of ETH traders continues to be pressured by weak demand for Ethereum spot ETF funds. Products listed in the U.S. recorded a net capital outflow of up to $507 million in November, and there were no notable corporate ETH reserve purchases, according to data from Strategic ETH Reserve.

Currently, the most evident driving force for ETH is the Fusaka upgrade, scheduled for implementation in early December, aimed at bringing improvements in scalability and security to the network.

However, with weak signals from the derivatives market and investor sentiment remaining cautious in the face of the risk of a global economic slowdown, the ability for ETH to break through to $3,900 in the short term still has many limitations.

Mr. Teacher