Ethereum (ETH) remains in a bear market, with technical indicators pointing to a potential 20% decline in the near future. The second-largest cryptocurrency has dropped to $2,670, losing over 35% from its December high, as it faces increasing competition from alternative blockchain networks and weak institutional demand.
Ethereum’s Struggles Amid Layer-1 and Layer-2 Competition
Ethereum’s price downturn comes as it battles competition from both layer-1 and layer-2 blockchain networks. Established rivals like Solana (SOL), Berachain (BERA), and BNB Smart Chain (BNB) continue to attract users and developers, offering lower fees and faster transactions.
At the same time, layer-2 solutions like Base and Arbitrum have gained significant market share. Over the past 30 days, Ethereum’s decentralized exchange (DEX) protocols processed $81 billion in trading volume, while Base and Arbitrum handled $35 billion and $28 billion, respectively. The shift highlights the increasing preference for cheaper and more efficient blockchain solutions.
Ethereum ETF Demand Weakens
Ethereum’s Exchange-Traded Fund (ETF) inflows have also disappointed investors. Unlike Bitcoin ETFs, which have attracted nearly $40 billion in inflows, Ethereum ETFs have seen net outflows in the last two trading days, bringing their cumulative total to just $3.15 billion. This signals weaker institutional demand for Ethereum compared to Bitcoin.
Additionally, Ethereum’s daily trading volume has plummeted to $126 billion, significantly lower than its December high of $330 billion. The network’s daily revenue has also fallen to just $5 million, down from over $58 million in November 2024.
Ethereum’s Futures Market Weakens
Ethereum’s futures open interest—a measure of the total value of outstanding derivatives contracts—has also declined significantly. Open interest currently stands at $23.3 billion, down from this month’s peak of $35 billion. The decline suggests that traders are pulling back from leveraged positions, further increasing downside risks.
Three Risky Patterns Signal a 20% Crash
From a technical perspective, Ethereum’s daily chart has formed three bearish patterns, each signaling potential further downside:
- Death Cross Formation: A death cross appeared on February 9, when the 50-day Weighted Moving Average (WMA) crossed below the 200-day WMA. This pattern historically indicates a prolonged downtrend.
- Rising Wedge Pattern: Ethereum’s price action has formed a rising wedge, characterized by two ascending converging trendlines. Typically, this pattern breaks downward, signaling a potential decline.
- Bearish Pennant Pattern: The bearish pennant consists of a steep downward movement followed by a small symmetrical triangle. This structure usually leads to a continuation of the previous downtrend.
If Ethereum breaks below its monthly low of $2,166, the next key support level to watch would be $2,000, representing a 20% decline from its current price. A drop below this level could signal further losses, as bearish momentum continues to build.
Outlook: Will Ethereum Rebound?
While Ethereum remains a dominant blockchain, its recent struggles with competition, ETF demand, and technical weakness raise concerns about its near-term price action. The next few weeks will be critical in determining whether ETH can hold above key support levels or face a deeper correction toward $2,000.
