Ethereum faces downside risk as volatility compresses
Ethereum remains under pressure despite improving macro sentiment and a fourth consecutive week of inflows into spot ETFs. As volatility continues to compress, the risk of a sharp directional move is increasing, with the $1,850 support level remaining critical for ETH.
Ethereum has struggled to gain traction despite a modest easing of geopolitical tensions following U.S. President Donald Trump's latest comments regarding upcoming negotiations with Iran. The news improved overall sentiment across global markets but failed to provide meaningful support for ETH.
A positive development remains the continued inflow of capital into U.S. spot Ethereum ETFs. Between July 27 and July 31, the funds attracted approximately $27.4 million, marking a fourth consecutive week of net inflows. However, the overall volume remains relatively modest and does not yet indicate a sustained increase in institutional demand.
Break below $1,850 could expose the 50 SMA
The $1,850 area remains Ethereum's key support level. A decisive break and sustained move below this level would increase the probability of a decline toward the 50-day SMA near $1,780, as highlighted in the previous analysis.At the same time, 30-day realized volatility has declined to 1.86%. Historically, Ethereum has tended to make strong directional moves after reaching such low levels. As a result, the current consolidation could ultimately end with a sharp breakout from the established trading range.
Accumulation grows, but downside risks remain
The cryptocurrency market has entered a more active accumulation phase. However, inflows remain relatively limited, making it too early to conclude that demand has returned on a sustainable basis.
Moreover, an accumulation phase alone does not guarantee that the market has already established a definitive bottom. Ethereum remains highly sensitive to geopolitical developments, Bitcoin's price action, and overall investor risk appetite.
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