Ethereum bearish intensifies: simultaneous surge in network activity decline and US fund outflows

Ethereum( ETH) is in a double crisis. Network activity has collapsed to May levels, and US-based funds are flowing out. Currently, ETH is fluctuating around $3.14K, but both technical signals and fundamentals suggest a bearish outlook.

Unexpected Slump in Network Activity

Since December, Ethereum’s weekly active addresses have dramatically shrunk. They dropped from 440,000 to 324,000, a loss of 116,000 addresses. This level matches the lows last recorded in May 2024. Transaction counts have also declined, returning to July’s low levels.

What this signifies in the market is clear. Active addresses and transaction volume are fundamental indicators of the network’s ‘vitality.’ Both declining indicate a spreading cautious sentiment and weakening new demand. Investors are choosing to ‘stay put’ and not move.

Just as PMI (Purchasing Managers Index) reflects the strength of economic activity, the ‘Participation Index’ in the crypto market also influences price momentum. When it drops, the market loses upward traction. Ethereum has just entered this state.

Signal of Capital Outflow from US Spot ETF

US liquidity has also deteriorated consecutively. Over the past three trading days, US spot ETH ETFs have experienced continuous net outflows. The total amount was $224.78 million, and since December 10, total net assets have decreased from $21.43 billion to $18.27 billion, a withdrawal of $3.16 billion.

This indicates more than just profit-taking; it suggests a shift in institutional investor sentiment. Continuous capital outflows imply a collective judgment that there is no reason to hold.

The Coinbase premium index turning negative also supports this. When this index goes negative, it means Coinbase’s price in the US is lower than Binance’s. In other words, US investors are selling more aggressively.

Macroeconomic Environment Worsening Adds Pressure

Recent US economic data also dampened sentiment. The unemployment rate rose to 4.6%, the highest since 2021. As macro conditions shake, investors have become more cautious about risk assets across the board.

The liquidation volume in derivatives markets also reflects this. Over the past 24 hours, ETH liquidations totaled $109 million, with longs accounting for $73.6 million. Most of the positions expected to rise have been liquidated. Short-term sentiment is quite subdued.

Technical Signals: Bearish Dominance, Short-term Rebound Conditions Forming

Price has rebounded once from the $2,850 support level, and retesting $3,100 is possible. However, momentum indicators still show bearish signals.

RSI (Relative Strength Index) remains below neutral, continuing a downward trend, indicating the trend is still bearish.

Meanwhile, Stochastic Oscillator has fallen into oversold territory, creating conditions for a short-term rebound or a brief upward correction.

In summary: “The overall trend is bearish, but the price has fallen too much recently,” which suggests a potential short-term bounce.

Future Scenarios: $3,100 vs $2,850

Bullish Scenario - $3,100 as the first hurdle:

• If ETH recovers and stabilizes above $3,100 on a daily basis, a broader rebound could target $3,470.

Bearish Scenario - Breakdown of $2,850, next support at $2,400–$2,600:

• If ETH falls below $2,850 on a daily basis, the next key support zone is around $2,400–$2,600.

Currently, Ethereum faces triple pressure: “Network activity slowdown + US fund outflows + macro deterioration.” Whether it can recover to $3,100 or break below $2,850 will be the key factor shaping the short-term trend.