The price of Ethereum has exhibited numerous chart patterns, suggesting a strong bearish breakdown in the coming months. On Monday, the ETH price traded at the important support level of $2,000, down by over 50% from its high in November. Spot ETH ETFs have also broken a crucial record in the past few days.
Ethereum ETFs Losing Streak Continues
The price of ETH has crashed as spot Ethereum ETFs have broken a record. SoSoValue data indicates that these funds have had net outflows in the past 13 consecutive days.
Notably, in the last 21 days, these funds have only had net inflows once. These funds have shed about $401 million this month, the worst monthly performance since July last year. All spot Ethereum ETFs have cumulative inflows of just $2.42 billion, bringing the total assets to $6.7 billion.
The Ethereum price has crashed as concerns about network competition remain. Most of this competition comes from layer-1 and layer-2 networks, the most important of which are Optimism, Polygon, Base, and Arbitrum.
Ethereum layer-2 networks provide users with a better platform that is much cheaper and faster. In most cases, a stablecoin transaction on a layer-2 network like Base costs almost nothing. This accounts for Base generating just $23 million in network fees this year despite handling billions in transaction volume.
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Standard Chartered analysts believe these layer-2 networks have siphoned over $50 billion in fees from Ethereum in the past few years. Due to its higher costs, Ethereum is unlikely to regain these users.
Another good example is Sonic, a layer-1 network recently rebranded from Fantom. AAVE, a popular DeFi player originally on Ethereum, has attracted over $250 million in assets in Sonic in less than a month; this trend highlights how users opt for alternatives like Sonic.
Data indicates that Ethereum is no longer the most profitable chain in the crypto industry. This year, it has made just $216 million, while Tron has made over $726 million.
Ethereum Price Analysis
The daily chart indicates that the Ethereum price has formed several bearish patterns, suggesting further downside potential. ETH has formed a death cross pattern, a popular bearish sign in the market.
It is now forming a bearish flag pattern, another risky pattern characterized by a vertical line and some consolidation. Most notably, the price has retested the key resistance level at $2,120, marking the lowest swing since August last year. A break-and-retest is a good continuation sign. Consequently, the coin will likely continue declining as sellers aim for a key support level of $1,500.
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