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The ongoing decline in Ethereum (ETH) price is underscored by diminishing network performance and a notable drop in total value locked (TVL), suggesting potential further downturns.
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Furthermore, the recent trend in the market has seen a significant risk-averse sentiment, particularly reflected in the ongoing outflows from Ether-based exchange-traded funds (ETFs).
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According to CoinShares, these sustained outflows have set a record, highlighting a notable lack of investor confidence in the current market environment.
ETH continues to struggle with price declines amid weak network activity and ETF outflows, signaling potential bearish trends in the near future.
Ethereum’s Price Pressured by Market Sentiment and Declining Activity
The Ethereum market is facing significant pressure as ETH prices oscillate within a tight range of approximately $130 over the past week. Despite efforts from bulls, the price remains capped below the critical resistance level of $2,000 due to compounded negative influences.
Recent metrics indicate that ETH is trading between $1,810 and $1,960, providing insight into the investor sentiment that currently prevails. Data from Cointelegraph Markets Pro paints a picture of a market grappling with a cautious approach as a result of declining Ethereum network activity coupled with diminishing TVL.
Spot ETF Outflows Weigh on Ether’s Demand
The persistent outflows in spot Ethereum ETFs have emerged as a primary factor contributing to the declining price of Ether. Over the last week, US-based Ether ETFs have experienced over $265.4 million in outflows, marking a troubling trend that illustrates investors’ risk aversion. According to SoSoValue, this trend of outflows from Ether-related products has been ongoing for more than two weeks.
Moreover, other investment products tied to Ethereum also experienced outflows totaling around $176 million, escalating the overall outflows for the month to $265 million. CoinShares’ head of research, James Butterfill, stated, “This also marks the 17th straight day of outflows, the longest negative streak since our records began in 2015.” This data underscores the need for investors to reassess their positions amid prevailing market uncertainties.
Weak Onchain Metrics Highlight Ethereum’s Struggles
A thorough examination of Ethereum’s onchain metrics reveals key weaknesses impacting its performance in the market. Despite retaining the top position in decentralized exchange (DEX) volume, Ethereum has witnessed a substantial decline, with volumes decreasing approximately 30% over the last week, settling at $16.8 billion.
Notably, specific protocols within the Ethereum network have exhibited significant drops in activity; for instance, the Maverick Protocol saw an 85% reduction, while Dodo’s volume decreased by 45%. Additionally, Ethereum’s total value locked (TVL) has faced a decline of 9.3% month-to-date, dropping dramatically from its January peak of $77 billion to just $46.37 billion as of mid-March.
Furthermore, several services such as Lido and EigenLayer reported substantial declines, with TVL shrinking by 30% and 30%, respectively. These trends highlight a broader issue affecting investor confidence in Ethereum.
Technical Indicators Suggest Potential Declines Ahead
Technical analysis reveals that Ether may be forming a bear flag on its four-hour chart. This pattern is typically indicative of further price movements to the downside. A bear flag is recognized by a brief upward channel occurring within a prevailing downtrend and is generally resolved when prices breach the lower boundary and descend further.
For ETH bulls, maintaining support at the flag’s lower boundary of $1,880 will be crucial. A daily close below this level could signal a breakdown, projecting a potential slide to $1,530, a drop that would be approximately 20% lower than current trading levels. The relative strength index (RSI) currently positioned at 48 reflects bearish conditions, maintaining pressure on the price movement.
Bulls will need to secure a daily close above the resistance at $1,930, which coincides with the 50-day simple moving average (SMA). Successfully surpassing the upper limit of the flag at $1,970 could potentially invalidate the bearish pattern and provide some relief for the struggling asset.
Conclusion
In concluding the current state of Ethereum, it is evident that the asset faces multifaceted challenges, including adverse market sentiment and weakening network fundamentals. With ETF outflows and declining onchain metrics dominating the landscape, ETH’s price movements will largely depend on how investors respond to prevailing technical signals. Current analysis suggests cautious navigation in the market, as traders might be bracing for more significant shifts in the coming days.
