Ether Faces Challenges Despite Institutional Interest and S&P 500 Gains

According to Cointelegraph, Ether (ETH) has been trading within a narrow range of $4,200 to $4,500 over the past two weeks, following its brief peak at an all-time high of $4,956 on August 24. This period of consolidation comes as the S&P 500 reached a new high on Thursday, driven by weaker-than-expected U.S. labor market data. Despite these developments, Ether has struggled to gain bullish momentum, with traders questioning the potential for further gains. Ether futures are currently trading at a 5% premium compared to standard ETH spot markets, indicating low demand from leveraged buyers. Typically, futures premiums range between 5% and 10% under neutral market conditions to account for the longer settlement period. The recent rally above $4,800 in August failed to sustain bullish sentiment among traders, further complicating the outlook for a $5,000 ETH price target in 2025. Additionally, Ether derivatives have experienced a bearish trend, coinciding with 10 consecutive days of net outflows from Ethereum spot exchange-traded funds (ETFs) until Monday. Although there was a reversal with $216 million in ETF net inflows on Tuesday and Wednesday, it did not generate lasting bullish momentum. Investor disappointment partly stems from a decline in Ethereum network fees, a trend affecting the broader cryptocurrency market. Over the past 30 days, Ethereum chain fees totaled $42 million, marking a 7% decrease from the previous month. In comparison, fees on Tron dropped by 12%, while Solana saw a 2% decline. The number of active addresses on Ethereum's base layer remained stable, but layer-2 solutions like Base, Arbitrum, and Polygon experienced significant declines in activity. Despite the decline in onchain activity, institutional investors continue to accumulate Ether for long-term reserves. Bitmine Immersion Tech (BMNR) recently added 202,500 ETH to its balance sheets, valued at over $880 million, bringing its total holdings to more than $9.1 billion. However, recent gains in the S&P 500 index do not necessarily reflect positive expectations for the broader economy. Traders are increasingly confident that the U.S. Federal Reserve will be compelled to cut interest rates, as initial claims for unemployment benefits have reached their highest level since October 2021. The stock market's behavior is increasingly resembling that of gold, offering dividends and buybacks based on earnings, while cryptocurrencies like Ether remain riskier amid fears of an economic slowdown. Consequently, achieving a $5,000 Ether price largely depends on reduced macroeconomic uncertainty.