Ethereum’s price took a hit recently, sinking below the $2,000 mark for the first time in months. As of Thursday, the second-largest cryptocurrency by market cap dropped to $1,985, a staggering 60% decline from its all-time high recorded in August. This downturn has been attributed to a broader softening in the crypto market, coinciding with the anticipation of the US consumer inflation report and a trend of continued asset outflows from Ether exchange-traded funds (ETFs).
For several weeks now, the price of Ether has been on a downward spiral, culminating in four consecutive weeks of losses. Notably, on Wednesday, spot ETH ETFs faced significant withdrawals, shedding over $129 million in assets in just a single day. Monthly outflows have now reached a cumulative $224 million, marking the fourth straight month of declines.
Despite these challenges, the cumulative net inflows for Ether ETFs since their inception stand at an impressive $11.75 billion, and daily trading volumes remain robust, consistently exceeding $1.65 billion. Additionally, US-listed Ether ETFs recently broke a three-day streak of outflows, witnessing an influx of $71 million between Monday and Tuesday, which has helped stabilize assets under management at $13 billion.
Interestingly, as prices dipped, the volume of transactions on decentralized exchanges built on the Ethereum network surged. Weekly decentralized exchange volumes soared to $20 billion, nearly doubling the $9.8 billion recorded just a month ago. This spike in trading activity has also driven up decentralized application (DApp) revenue to $26.6 million for the week ending February 8. While Solana still leads the charge with $31.1 million in weekly DApp revenue, the competition between the two networks continues to heat up.
Yet, as Ethereum’s price struggles, its staking metrics tell a different story. For the first time in its history, Ethereum’s staking ratio has reached a record high of 30%, with over 36.8 million ETH locked up in the staking queue, valued at approximately $72 billion at current prices. Notably, less than 25,000 ETH are waiting to exit the staking process, indicating that holders are opting to commit their assets long-term.
Currently, nearly 1 million validators are actively securing the network, ensuring its stability and resilience despite ongoing market volatility. The Relative Strength Index (RSI) for Ethereum is nearing oversold territory, which has not been seen since April of the previous year, hinting at potential price recoveries if conditions improve.
Furthermore, while futures open interest in Ethereum has fallen from over $70 billion to around $23 billion, the annualized premium of ETH futures has managed to stabilize at 3%. Analysts are closely monitoring these derivatives, as they signal market sentiment and investor demand.
Technically, Ethereum’s price action has formed an inverted head-and-shoulders pattern on the weekly chart. Traditionally, this pattern is considered indicative of a bullish reversal, suggesting that there might be a light at the end of the tunnel if the right conditions unfold. Prices dipped below a crucial support level at $2,112, the lowest point in August 2024, but analysts believe the cryptocurrency may soon find a bottom, targeting upward movement toward $2,400 if the current trends persist.
As the crypto community keeps a watchful eye on Ethereum’s next moves, the contrast between its price struggles and staking achievements paints a picture of resilience. Stakeholders are cautiously optimistic, hoping for a turnaround that could revitalize both the price and market sentiment for this leading blockchain network.
