Ethereum Plummets 56% Amid Trade War Uncertainty, Institutional Outflows

Ethereum (ETH) has experienced a significant decline in price, losing over 56 percent since early December, trading at approximately $1,869 on April 2. This downturn is attributed to the macroeconomic uncertainty stemming from tariff trade wars. The large-cap altcoin, with a fully diluted valuation of about $225 billion, has seen a notable decrease in demand, particularly from institutional investors. The U.S. spot Ether ETF recorded a net cash outflow of about $403 million, indicating a lack of institutional interest.

On-chain data from Santiment reveals that Ether whales, holding between 100k and 1 million coins, have sold around 760 ETH in the past two weeks, reducing their holdings to about 18.81 million coins. This selling activity has contributed to a 63 percent decline in whale activity on the Ethereum network since February 25. The reduced participation from large investors has further exacerbated the bearish sentiment surrounding Ethereum.

From a technical analysis perspective, Ethereum's price has been consistently closing below the 200-week Simple Moving Average (SMA), which has heightened bearish sentiment. However, the ETH/USD price has been retesting a crucial support level above $1,800 over the past four weeks. If this support level holds, it could potentially yield a renewed bullish sentiment. Conversely, a consistent close below the final rising weekly logarithmic trend in the coming weeks could spell doom for the entire altcoin market.

The weekly Relative Strength Index (RSI) is currently hovering at oversold levels, suggesting a substantial likelihood of a V-shaped reversal. Additionally, the crypto market is expected to perform better in the second quarter of 2025 after a poor performance in the first quarter. This potential market recovery could provide a favorable environment for Ethereum to rebound from its current struggles.