Ethereum (ETH) continues to underperform compared to the broader crypto market. After losing key support at $1,500, technical and market indicators suggest that ETH could see deeper corrections before any significant recovery begins.
Here are three key reasons behind Ethereum’s ongoing price decline — and what needs to change for a reversal to occur.
1. Ethereum’s Price Falls Below Realized Price
One of the strongest bearish indicators currently affecting Ethereum is its spot price dropping below its realized price, an on-chain metric that calculates the average price at which coins last moved on the blockchain.
According to CryptoQuant analyst theKriptolik, this scenario often marks the capitulation phase, where most holders find themselves at a loss and panic selling intensifies.
Historically, when Ethereum’s spot price drops below the realized price, it precedes major sell-offs:
- June 2022: ETH dropped 51% following the Terra Luna crash
- November 2022: ETH fell 35% after the FTX collapse
Now, ETH is again trading under its realized price, suggesting another potential bearish continuation phase may be underway.
2. Weak Flows Into Spot Ethereum ETFs
Investor interest in spot Ethereum ETFs has declined sharply, with over $94.1 million in net outflows recorded in the last two weeks. On April 8 alone, the products saw $3.3 million exit.
This is concerning, as institutional demand was once considered a pillar of ETH’s long-term value, especially following optimistic sentiment around a possible SEC ETF approval back in May 2024.
Data from CoinShares further confirms the bearish trend, reporting $37.4 million in weekly outflows from Ether-focused investment products as of April 4.
Unless ETF demand rebounds, this lack of institutional support could keep ETH under pressure.
3. Bearish Sentiment Dominates Derivatives Markets
Ethereum’s derivatives market is also showing signs of weakness, with two important indicators flashing bearish:
- Open Interest (OI): Currently at $16.7 billion, down 48% from its January 24 peak of $32.3 billion. This shows waning interest from speculative traders.
- Negative Funding Rates: In perpetual futures, shorts are paying longs, meaning bearish bets outweigh bullish ones. This often signals a risk-off mood across traders.
Low open interest and negative funding rates indicate that traders are exiting the market or betting against ETH, further contributing to downward pressure.
What Must Change for a Rebound?
For Ethereum to reverse its current downtrend:
- It needs to reclaim its realized price level and establish strong support above $1,500
- Spot ETF flows must return to positive territory, signaling renewed institutional interest
- Open interest must rise, alongside a shift in funding rates toward positive levels
Until then, Ethereum may remain stuck in a bearish cycle unless broader market sentiment or macroeconomic factors trigger renewed buying.
