Ethereum's rise in early August led the largest altcoin to a cycle peak of $4,793 on August 14, marking one of its strongest performances of the year.
However, the rapid rise also triggered a wave of profit-taking, which has since put significant pressure on the asset and caused it to lose much of its recent gains. With sales intensifying in the derivatives market, ETH now faces the risk of falling below the $4,000 price mark.
ETH is facing strong selling pressure
The price of ETH has been pressured by the bearish sentiment among its derivatives traders. This is reflected in its taker buy/sell ratio, which has mostly remained below one since the beginning of August.
At the time of this analysis, it is at 0.92, according to CryptoQuant, indicating that sell orders dominate buy orders in the ETH futures market.
Taker Buy/Sell Ratio of ETH. Source: CryptoQuant
The taker buy-sell ratio measures the balance between buy and sell orders in the futures market of an asset. A ratio above one indicates stronger buying pressure, showing that traders are actively seeking price gains. On the other hand, a value below one reflects dominant selling pressure, often linked to profit-taking or bearish sentiment.
Since the beginning of August, the taker buy/sell ratio of ETH has mostly remained below one, confirming persistent selling among futures traders.
To provide context, the coin's performance has been largely lackluster for much of the year, so when a bullish trend finally began in July and extended into early August, many traders took the opportunity to secure profits.
This growing selling pressure confirms the weakening of bullish sentiment and could worsen ETH's price drop if it continues.
Traders abandon high-risk bets amid price pressure
The recent drop in the Estimated Leverage Ratio (ELR) of ETH also confirms the low confidence among the coin's investors. According to CryptoQuant, the ELR of ETH is currently at 0.66 — its lowest value in the last five days.
Estimated Leverage of ETH. Source: CryptoQuant
The ELR of an asset measures the average leverage that its traders use to execute trades on a cryptocurrency exchange. It is calculated by dividing the open interest of the asset by the exchange's reserve for that currency.
When the ELR of an asset falls, it indicates a reduced risk appetite among traders. This trend signals that ETH investors have become increasingly cautious this week and are now avoiding high-leverage positions that could exacerbate potential losses.
Which Comes First: $3,491 or $4,793?
At the time of this analysis, ETH is trading at $4,295. If selling pressure intensifies, the altcoin may test the support floor again at $4,063. If this important price mark gives way, ETH could drop to $3,491.
Price Analysis of ETH. Source: TradingView
On the other hand, ETH could see a recovery and rise to $4,793 if new demand enters the market.
The article Ethereum may fall below $4,000 after August's high was first seen on BeInCrypto Brazil.
