Increasing Sell Pressure Affects Ethereum as On-Chain Activity Drops to Seven-Month Lows

Ethereum (ETH) is currently experiencing a pullback that suggests more than just temporary price fluctuations. With ETH trading below $3,000, a mix of significant liquidations, decreasing network activity, and ongoing institutional sell-offs heightens fears of a diminishing demand.

Key Takeaways

Ethereum (ETH) has experienced a 12% price drop over the past week, signaling ongoing sell pressure.
Active user participation on the Ethereum network has decreased significantly, with the lowest daily active addresses recorded since May.
Institutional investors have been pulling out funds from Ethereum ETFs, indicating reduced market engagement.
If ETH fails to reclaim resistance levels between $3,050 and $3,120, it may test support near $2,800, with analysts eyeing the $2,400–$2,600 range as the next area of concern.

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Although the price has remained above crucial support levels, various indicators point to continued selling pressure, resulting in a cautious stance among market participants.

Recent declines show that Ethereum has dropped approximately 12% over the past week, which is a poor performance compared to several major assets during a wider market correction. This decline has brought ETH close to the $2,850–$2,900 range, leading to over $200 million in liquidations—one of the largest liquidation events witnessed in recent months.

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Declining Network Activity and Institutional Outflows Imply Reduced Market Participation

In addition to price movements, on-chain metrics for Ethereum reveal a decline in participant engagement.

Weekly active addresses have decreased from about 440,000 earlier in the quarter to around 324,000 in December, marking the lowest figures seen since May. Furthermore, transaction counts have also fallen to their mid-year lows, indicating lowered activity from both retail and institutional investors.

In parallel, U.S. spot Ethereum Exchange-Traded Funds (ETFs) continue to experience significant outflows. Data from SoSoValue indicates that over $224 million has exited ETH ETFs during several consecutive sessions, predominantly driven by BlackRock’s ETHA fund.

Since mid-December, net assets in U.S. spot ETH ETFs have decreased by over $3 billion, suggesting that institutions are reducing their investment exposure rather than increasing their positions. The negative trend in the Coinbase Premium Index further strengthens the idea that selling pressure from U.S.-based parties has intensified.

The actions of large investors are adding to the current selling pressure. On-chain data reveals that a small group of whale wallets has sold more than 28,500 ETH within a brief timeframe, including transactions worth over $80 million in total.

Despite this distribution of ETH, the cryptocurrency has managed to avoid a significant breakdown, as buyers have consistently defended levels near $2,880.

From a technical perspective, Ethereum is still in a medium-term downtrend. Prices continue to remain below significant moving averages, and momentum indicators like the RSI are below neutral levels.

Resistance levels are concentrated between $3,050 and $3,120. Should ETH fail to return to this zone, it could face another challenge at $2,800. If that support level is breached, analysts suggest that the $2,400–$2,600 range will become the next key focus for traders.

Cover image from ChatGPT, ETHUSD chart from Tradingview