Ethereum News Today: DeFi's TVL Plunge Sparks Ethereum's Bearish Slide

Ethereum (ETH) faces mounting pressure as long-term holders offload significant volumes and broader market sentiment turns bearish, raising concerns about a potential price drop to $2,500. The cryptocurrency, which recently traded at $3,609, has seen a confluence of factors eroding confidence, including a sharp contraction in decentralized finance (DeFi) activity, weakening institutional demand, and technical indicators signaling further downside risk.

The DeFi sector, a key driver of Ethereum demand, has experienced a dramatic decline in total value locked (TVL). Data from DeFiLlama shows TVL plummeted from $172 billion in early October to $136.26 billion by November, wiping out over $36 billion in value.

Major protocols like Aave, Lido, and EigenLayer reported TVL declines ranging from 8% to 40%, underscoring a widespread slowdown in the ecosystem. This retreat has occurred despite Ethereum's price rallying earlier in the year, suggesting demand growth is no longer fueled by DeFi adoption.

Compounding the issue, institutional interest in Ethereum has waned. Combined holdings from digital asset treasury funds and exchange-traded funds (ETFs) fell from 12.95 million ETH in October to 12.75 million ETH in November. While ETF inflows briefly reversed course on November 6, outflows resumed the following day, highlighting fragile investor sentiment. Analysts warn that sustained outflows could exacerbate selling pressure, particularly as macroeconomic uncertainty and lack of key price catalysts weigh on the market.

Technical indicators further reinforce bearish concerns. Ethereum's price dropped 7% to $3,170 in early November, approaching the realized cost basis of large holders with 10K–100K ETH balances (around $2,900). Increased loss realization-over $100 million in losses booked since Sunday-has historically triggered sharp selloffs, as seen in late January 2025 when prices collapsed by 50% over three months. The 50-day and 100-day exponential moving averages (EMAs) now act as critical support levels, with a break below $3,100 potentially targeting $2,850.

Retail and institutional demand remain subdued. Open interest (OI) in Ethereum derivatives has stagnated below 12 million ETH since October 10, while the RSI and MACD indicators continue to signal bearish momentum. A death cross pattern-where the 50-day EMA crossed below the 100-day EMA-has also intensified bearish sentiment, increasing the likelihood of an extended downtrend.

Despite these headwinds, some analysts remain cautiously optimistic. Ted Pillows, a noted crypto analyst, identifies $3,700 as a key resistance level, while the broader crypto market's recent stabilization offers a potential floor. However, with DeFi TVL and retail confidence at multi-year lows, the path of least resistance for Ethereum appears downward.