Ethereum Price Pressured by 9.3% TVL Decline, ETF Outflows

Ethereum's price has been under significant pressure recently, driven by a combination of weak network activity and substantial outflows from Ether-based exchange-traded funds (ETFs). The total value locked (TVL) in the Ethereum network has seen a notable decline, which, coupled with the risk-averse sentiment in the market, suggests that further downturns may be on the horizon.

The Ethereum market has been oscillating within a tight range of approximately $130 over the past week, with prices capped below the critical resistance level of $2,000. This price movement reflects the cautious approach of investors, who are grappling with declining network activity and diminishing TVL. Recent data indicates that ETH is trading between $1,810 and $1,960, highlighting the prevailing market sentiment.

The persistent outflows in spot Ethereum ETFs have been a primary factor contributing to the declining price of Ether. Over the last week, US-based Ether ETFs have experienced significant outflows, marking a troubling trend that illustrates investors’ risk aversion. This trend of outflows from Ether-related products has been ongoing for more than two weeks, underscoring the need for investors to reassess their positions amid prevailing market uncertainties.

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. Specific protocols within the Ethereum network have exhibited significant drops in activity, with the Maverick Protocol seeing an 85% reduction and Dodo’s volume decreasing 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. These trends highlight a broader issue affecting investor confidence in Ethereum.

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.

In conclusion, Ethereum 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.