The price of Ether (ETH) has been trading within a narrow range of approximately $130 over the past week, with the $2,000 mark continuing to serve as a significant barrier above.
According to recent data, the ETH price fluctuates within a tight band between $1,810 and $1,960.
ETH/USD daily chart.
Several factors contribute to Ether’s inability to break above $2,000, including waning network activity, a drop in total value locked (TVL), negative flows in spot Ethereum ETFs, and overall weak technical indicators.
Negative flows from spot Ethereum ETFs
The sluggish performance of Ether’s price can be linked to a more risk-averse stance among investors, which is evident in the trends observed in spot Ethereum exchange-traded funds (ETFs). Outflows from these investment products have continued for over two weeks.
U.S.-based spot Ether ETFs have experienced outflows for the past seven days, amounting to $265.4 million.
Ether ETF flow chart.
Concurrently, other Ethereum investment products saw outflows totaling $176 million, bringing the month’s total outflows from Ether ETPs to $265 million, a record high for negative inflow levels, according to the head of research at a well-known firm.
They pointed out:
“This also signifies the 17th consecutive day of outflows, marking the longest downturn since we started tracking these statistics in 2015.”
Declining on-chain activity impacts ETH price
To identify the primary reasons for Ether’s current weakness, it is vital to assess the Ethereum network’s on-chain metrics.
The Ethereum blockchain continues to lead in terms of weekly decentralized exchange (DEX) volume; however, this metric has seen a decline recently, dropping nearly 30% over the past week to $16.8 billion as of March 17.
Ethereum: 7-day DEX volumes, USD.
Noteworthy declines for Ethereum included an 85% decrease in activity on Maverick Protocol and a 45% fall in volumes for Dodo.
In addition, the total value locked (TVL) in Ethereum is down 9.3% for the month, having decreased 47% from its January peak of $77 billion to $46.37 billion on March 11.
Ethereum: total value locked.
Lido has been one of the weakest performers in terms of Ethereum deposits, with a 30% drop in TVL over the past month. Other significant declines include EigenLayer (-30%), Ether.fi (-29%), and Maker (-28%).
Potential bear flag target for Ether at $1,530
Currently, Ether’s technical indicators suggest the formation of a potential bear flag on the four-hour chart, indicating that further downside may be on the horizon.
Related: ETH could find a bottom at $1.6K as the SEC delays several crypto ETFs, and more: Recent Digest from March 9 – 15
A bear flag represents a continuation pattern of a downtrend characterized by a series of upward-sloping lines that run parallel to each other, emerging within a prevailing bearish trend. It typically resolves when the price decisively breaks below its lower trendline, with potential price movement reflecting the height of the preceding downtrend.
Bulls are hoping to find support at the flag’s lower boundary at $1,880. A daily close below this level could indicate a bearish breakdown from the chart pattern, suggesting a decline towards $1,530, which would equate to a 20% drop from the current pricing.
ETH/USD daily chart.
The relative strength index remains in negative territory at 48, indicating that current market conditions still lean toward a downward trend.
Bulls will aim for a daily close above the mid-point of the flag at $1,930 (in alignment with the 50 SMA) to maintain support at $1,880. They must push the price beyond the upper boundary of the flag at $1,970 to invalidate the bear flag pattern.
This content has been provided for informational purposes only and does not constitute investment advice or recommendations. Investment and trading involve risks, and readers are encouraged to perform their own due diligence before making any decisions.