Ethereum has been experiencing a consistent decline, with its price dropping by 16% over the past week, as reported by CoinMarketCap. Analysts are increasingly worried that the cryptocurrency could drop further to around $1,200, especially as critical support levels appear to be weakening. The situation is exacerbated by the increased competition from other blockchain platforms, such as Solana, and a shift toward layer-2 solutions.
Since failing to surge past the $4,000 resistance, Ethereum’s price has become ensnared in a bearish cycle. It has consistently moved downward, crossing critical support thresholds, including the important 200-day moving average located at approximately $3,000. Although there was a momentary recovery when it found support around $2,200, ETH remains at risk as long as it trades under the influential 200-day moving average.
On the 4-hour chart, the cryptocurrency is currently in a consolidation phase, with a trading value around $2,764. Following a test of $2,229 on February 3, the price appears to be attempting to recover. However, the Relative Strength Index (RSI) remains below the 50% mark, indicating continued bearish momentum. Should ETH fail to break back above the $3,000 level, further declines could become imminent.
The conditions in Ethereum’s futures market also reflect the ongoing price challenges. Funding rates—a gauge of trader sentiment—have significantly decreased during this downturn. While this indicates that the futures market is stabilizing, it also suggests a lack of robust buying interest necessary for a rebound. Without a fresh wave of demand in the spot market, the likelihood of Ethereum experiencing a rebound remains low. The crypto community seems divided on Ethereum’s potential, with some voicing concerns that a crucial support breakdown at $2,400 could trigger a swift decline toward $1,200.
Moreover, Ethereum is confronting competitive challenges beyond just its price struggles. Reports reveal that Ethereum’s position is threatened by rising competition from alternative blockchain networks, notably Solana. Additionally, the increasing dependence on layer-2 networks raises concerns. While these networks help alleviate congestion issues, they also draw activity away from Ethereum’s mainnet, which could negatively impact transaction fees and revenue for validators, thereby undermining Ethereum’s economic framework.
A significant instance of this trend is Uniswap’s initiative to migrate to Unichain. As a major gas-consuming protocol within the Ethereum ecosystem, this transition could considerably influence the overall activity and fee generation on the network.
Despite this bearish outlook, there may still be a glimmer of hope for Ethereum, as some on-chain metrics hint at positive shifts. Notably, a recent decline in exchange net flows indicates a trend toward self-custody, which may suggest reduced selling pressure.
Ultimately, unless Ethereum can regain major resistance levels and attract renewed demand, it risks further losses in the near future. Investors are closely monitoring the $2,400 support level on the daily chart, which could be pivotal in determining Ethereum’s upcoming performance.