Ethereum Price Eyes a Crash to $1,500 as ETF Outflows and Network Fees Drop

Key Insights

• Ethereum price has slowly formed an inverted cup & handle pattern.
• Spot Ethereum ETFs have shed millions of dollars in assets this year.
• The network fees and total value locked have continued falling.

Ethereum price remained under pressure this week as technical weakness combined with slowing network activity and continued ETF outflows. Ether traded near $2,068 after falling from April’s high around $2,470.

The decline mirrored broader crypto market weakness as Bitcoin traded near $75,000 while several large-cap altcoins consolidated within narrow ranges.

Market participants also tracked weakening institutional demand, falling Ethereum fees, and lower decentralized finance activity across the network.

The daily chart shows that ETH price has slipped in the past few days, mirroring the performance of the broader market. Bitcoin retreated to $75,000, while top tokens like Solana and Ripple have remained in a narrow range.

A closer look shows that the coin is slowly forming an inverted cup-and-handle pattern whose upper side is at $2,470 and the lower side is at $1,763. This pattern has a depth of $707.

The coin has slumped below the 50-day Exponential Moving Average (EMA). Also the Percentage Price Oscillator (PPO) formed a bearish crossover pattern on April 22nd. These two lines have moved below the zero line and are pointing downwards. That is a sign that the downward momentum is continuing.

Therefore, the path of the least resistance for Ethereum price is extremely bearish, with the initial target being at $1,763, its lowest point in February this year. This target is about 15% below the current level. A break below that level will point to further downside, potentially to the psychological level at $1,500.

On the other hand, a move above the $2,200 will invalidate the bearish outlook and point to more gains.

A major risk for Ethereum prices is that demand for its spot ETH ETFs has faded in the past few weeks. According to SoSoValue, data shows that these ETFs shed over $35 million in assets on Tuesday, bringing the monthly outflows to over $334 million. This is a major headwind as the funds added over $355 million in inflows in the previous month. Before that, the funds shed assets in the previous five consecutive months.

A closer look at these funds show that Fidelity’s FETH ETF led the outflows on Wednesday as they shed over $17 million in assets. Grayscale’s ETH lost $8.26 million, while its ETHE fund lost over $7.89 million.

A potential reason behind the ongoing Ethereum ETF outflows is that investors have continued to invest in the better-performing assets.

A good example of this is that investors have continued to pile into companies in the artificial intelligence and space industries. AI companies are booming ahead of the OpenAI IPO, while space companies are booming ahead of the SpaceX IPO.

Rising ETH ETF outflows is a sign that demand has continued falling. This demand issue is also visible in other areas, including the waning futures open interest and volume.

Meanwhile, Ethereum is no longer the fee machine that it was a few years ago and has been overtaken by other top platforms. For example, data compiled by DeFi Llama shows that the network’s fees have been in a strong downward trend in the past few months.

It made just $39 million in the first quarter after making $76 million in the previous quarter. A closer look shows that the fees have been falling after peaking at $1.17 billion in the first quarter of 2024.

In contrast, top players in the crypto industry are making a fortune. For example, Tether has made over $1.4 billion in the last 90 days, while Tron, Circle, Hyperliquid, and Sky have made $677 million, $593 million, $157 million, and $109 million, respectively.

More data shows that the network’s total value locked (TVL) has dropped sharply in the past few months. It dropped to $42 billion from last year’s high of over $93 billion.

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