Ethereum Price Faces Challenges Amid Slumping Fees and ETF Inflows

Ethereum's price is currently struggling to rise above the crucial $3,000 mark as exchange-traded fund (ETF) inflows have decreased, and transaction fees on the network have fallen significantly.

Key Takeaways

Ethereum's price is at $2,945, down 40% from its yearly high.
There has been a substantial slowdown in demand for Ethereum ETFs and a notable outflow of funds.
Transaction fees on the Ethereum network have decreased dramatically.
A bearish price trend is indicated by technical analysis, with potential for further decline.

Ethereum is trading at $2,945, which represents a significant drop of 40% from its peak this year. The cryptocurrency has formed a concerning pattern that suggests possible further declines in the near future. Recent data from SoSoValue indicates that interest in Ethereum ETFs has declined sharply over the past few weeks, with the network experiencing over $38 million in outflows last Friday, following earlier losses of $52 million and $95 million over the previous two days.

In total, these funds faced $102 million in outflows last week, compounding a staggering $643 million that flowed out the week before, marking the second consecutive month of negative trends.

Ethereum price forms a risky pattern as network fees, ETF inflows slump - 1

Network Performance and Fees

Meanwhile, data from Nansen reveals that Ethereum's earnings from transaction fees have decreased significantly. Over the past 30 days, the Ethereum network has generated $11.1 million in fees, which is a 57% drop compared to the same timeframe last year. This decline coincided with the Fusaka upgrade and a slowdown in network activity. For instance, statistics from DeFi Llama show that the decentralized exchange (DEX) volume on the Ethereum network plummeted to $44 billion in December. This figure has decreased for four straight months, reaching its lowest point since October of last year, after peaking at over $126 billion in August.

On a more optimistic note, BitMine has begun staking its substantial Ethereum reserves, a strategy it anticipates will yield millions of dollars in returns annually. This new influx from staking may help counter the nearly $90 million outflows witnessed in the past month.

Technical Analysis of Ethereum's Price

ethereum price

Examining the daily timeframe chart, Ethereum's price has exhibited a consistent downtrend over the last few months, declining from a high of $4,980 in August to its current position of $2,940.

The chart reveals that Ethereum has formed a death cross pattern and is currently on its way to developing a head-and-shoulders pattern. Additional indicators include a bearish pennant formation and a position below the Supertrend indicator. Given these factors, the short-term forecast for Ethereum appears bearish, with an initial target set at $2,615, the lowest level from November. Should it fall below this price point, further declines could extend to the significant psychological level of $2,500.