Ethereum price prediction as death cross forms, ETF and staking outflows rise

Ethereum price has entered a bear market after a significant drop of 30% from its yearly high. Currently trading at $3,475, Ethereum has exhibited a risky pattern implying further downside as institutional demand wanes. Its price has dropped from an August high of $4,950 to today’s level, forming the bearish death cross pattern, a scenario where the 50-day and 200-day Weighted Moving Averages (WMA) cross each other—often signaling more declines.

Ethereum has also formed a head-and-shoulders pattern with a slanted neckline and a bearish flag pattern characterized by a vertical line and channel. Furthermore, the price has moved below the 38.2% Fibonacci Retracement level at $3,580, pointing to a potential drop to the 50% and 61.8% retracement levels. The next critical support level is the psychological marker at $3,000, while a break above $3,800 would invalidate the bearish outlook.

Ethereum’s price decline is attributed to its deteriorating fundamentals. Data from DeFi Llama reveals that the total value locked (TVL) in Ethereum smart contracts dropped 16% in 30 days, now at $157 billion. Additionally, data from Nansen shows a 23% reduction in network transactions (45.2 million) and a staggering 42% drop in fees to $27 million, with active addresses dipping to 8.2 million. Meanwhile, competitors like Tron and BNB Chain have seen growth with transactions rising 38% and 35%, respectively.

The exchange-traded funds (ETF) market is another contributor to Ethereum's decline. This week, ETFs faced $107 million in outflows, following $507 million in outflows last week. BlackRock’s ETHA ETF leads with $13.8 billion in assets, while Grayscale’s ETHE holds $3.38 billion. Additionally, treasury companies have experienced major setbacks. For example, BitMine stock plummeted from $160 in July to $40, and SharpLink stock declined from $123 in May to $11, resulting in reduced token acquisitions.

Ethereum’s open interest has dropped sharply from $70 billion in August to $39 billion since a major liquidation event in October, where $3.8 billion worth of positions were liquidated within a single day. Meanwhile, Ethereum’s weighted funding rate has stagnated, a clear sign of dried liquidity. Furthermore, there has been a net decrease of 5.2k ETH worth $18 million in staked Ethereum over the last month, according to StakingRewards. This decline in staked assets highlights a bearish sentiment, as investors are likely selling their tokens.