Key Points
Ethereum’s price continues to struggle in a bear market.
There are indications that it may soon experience a significant drop, potentially as much as 20%.
Market Challenges and Competition
On Monday, Ethereum (ETH), the second-largest cryptocurrency, saw its price fall to $2,670.
This represents a decrease of over 35% from its peak in December.
One of the factors contributing to Ethereum’s performance is the increasing competition within the blockchain industry.
This competition primarily comes from popular layer-1 networks such as Berachain (BERA), Solana (SOL), and BNB Smart Chain (BNB).
Ethereum is also losing market share to layer-2 blockchains like Base and Arbitrum.
These platforms have gained popularity due to their lower costs.
For instance, in the past 30 days, DEX protocols on Ethereum processed $81 billion, while Base (BASE) and Arbitrum (ARB) handled $35 billion and $28 billion, respectively.
Third-party data indicates that Ethereum ETFs aren’t attracting the expected inflows.
In the last two market days, these ETFs experienced outflows, bringing the total to $3.15 billion.
In contrast, Bitcoin ETFs have seen almost $40 billion in inflows.
Ethereum’s daily trading volume has been on a downward trend, dropping to $126 billion from its December high of $330 billion.
Similarly, its revenue has fallen to $5 million, a stark contrast to the over $58 million recorded in November last year.
Ethereum’s futures open interest has also taken a hit, falling from its 2024 highs.
The current interest stands at $23.3 billion, a drop from this month’s high of $35 billion.
Chart Patterns Indicate Further Downturn
The daily chart suggests that Ethereum’s value may be at risk of further decline.
A death cross was formed on February 9 when the 50-day and 200-day Weighted Moving Averages intersected.
The coin has also formed a rising wedge pattern, characterized by two ascending converging trendlines.
Additionally, a bearish pennant pattern, consisting of a long vertical line and a triangle, has been observed.
Typically, these patterns indicate a potential decline.
The next level to watch is $2,166, Ethereum’s lowest level this month.
A break below this level could signal further decline, potentially to $2,000.
