Mounting Sell Pressure Hits Ethereum as On-Chain Activity Falls to Seven-Month Lows

Overview

Ethereum has recently experienced a notable pullback, trading below the $3,000 mark. This decline is attributed to a combination of heavy liquidations, reduced network activity, and ongoing institutional outflows, raising concerns about demand for the cryptocurrency.

Current Market Situation

Ethereum’s price has dropped approximately 12% over the past week, underperforming against several major assets during a broader market correction. The price movement brought ETH close to the $2,850–$2,900 range, resulting in over $200 million in liquidations, marking one of the largest liquidation events in recent months. Despite this downward trend, ETH’s price has shown slight upward movement on the daily chart.

Declining On-Chain Activity

Ethereum’s on-chain metrics indicate a significant decline in user participation. The number of weekly active addresses has decreased from around 440,000 earlier in the quarter to approximately 324,000 in December, representing the lowest level since May. Additionally, transaction counts have also dropped to mid-year lows, suggesting reduced engagement from both retail and institutional users.

Institutional Outflows

The trend of outflows from U.S. spot Ethereum exchange-traded funds (ETFs) further underscores the waning interest in Ethereum. Data indicates that over $224 million has exited ETH ETFs across several consecutive sessions, primarily driven by outflows from BlackRock’s ETHA fund. Since mid-December, total net assets in U.S. spot ETH ETFs have decreased by more than $3 billion, indicating a trend of institutions reducing their exposure to Ethereum rather than increasing it.

Whale Activity and Market Risks

Large holders, or whales, have also contributed to the selling pressure in the market. On-chain data reveals that more than 28,500 ETH has been sold by a small number of whale wallets within a short timeframe, with transactions totaling over $80 million in value. Despite this significant distribution, ETH has managed to maintain support levels near $2,880, as buyers step in to defend these prices.

From a technical perspective, Ethereum remains in a medium-term downtrend. The price continues to trade below key moving averages, and momentum indicators, such as the Relative Strength Index (RSI), are below neutral levels. Resistance levels are concentrated between $3,050 and $3,120, and failure to reclaim this zone may leave ETH susceptible to testing lower support levels, including the $2,800 mark.

From author

The current landscape for Ethereum reflects a combination of market dynamics that could impact future trading behavior. The combination of declining network activity, institutional outflows, and significant whale selling creates an atmosphere of uncertainty. As the market grapples with these factors, it remains to be seen how Ethereum will navigate these challenges and what strategies investors may adopt in response.

Impact on the crypto market

• Ethereum’s recent price decline highlights increasing sell pressure, raising concerns about future demand.
• A significant drop in weekly active addresses suggests reduced participation from users, which may affect overall market sentiment.
• Persistent outflows from ETH ETFs indicate institutions are reevaluating their positions in Ethereum, potentially leading to further downward pressure on prices.
• Whale selling activity contributes to market volatility, indicating that large holders are adjusting their strategies amid changing market conditions.
• Technical indicators suggest that Ethereum may face additional challenges in reclaiming higher price levels, leading to cautious trading behavior among investors.