Ethereum Faces Downward Pressure Due to Network Activity Collapse

Ethereum network shows concerning signs of weakening, fueling a bearish outlook on ETH price. With activity dropping significantly across multiple key indicators, the altcoin faces combined pressure suggesting considerable risk in the coming weeks.

Critical Drop in Transactions and Locked Value

Network data revealed a notable decline in Ethereum activity. The daily transaction count fell to 1.95 million during the third week of February, a 33% decrease compared to 2.9 million at the start of the month. This downward pattern had already been observed in January 2024, a period that coincided with a 30% drop in Ether’s price.

Total Value Locked (TVL) in smart contracts also contracted considerably. Figures dropped to $54.5 billion from $70 billion in just over two weeks, marking a 22% decrease in liquidity deposits. Meanwhile, staking platforms like Ether.fi and EigenLayer experienced even sharper declines of 35%, while Uniswap saw a 26% reduction in deposits on its decentralized exchange (DEX) protocol.

Trading volume on Ethereum-based DEXs also showed signs of weakening, falling from $3.72 billion to $1.5 billion over the same period.

Technical Signals Support Bearish Outlook

From a technical perspective, ETH daily charts show a bearish pennant formation acting as a continuation indicator of the downtrend. This technical pattern, consolidated within an ascending triangle after a significant price drop, has a critical breakout level at $1,950.

According to technical calculations, if the price falls below this lower trendline, the next target could be $1,100, representing a potential 43% decrease from current levels near $1.93K. Crypto analyst Crypto Patel emphasized that maintaining support at $1,800 is crucial to prevent the bearish scenario from consolidating.

Investment Outflows Intensify Bearish Outlook

Global Ethereum investment products experienced significant net outflows, totaling $85.1 million between February 9 and 13. This negative capital flow from institutional investors has directly contributed to downward pressure on prices and reflects a temporary loss of confidence in the asset.

The convergence of all these factors—from declining network transactions to investment outflows and negative technical signals—paints a bearish picture that warrants attention. Investors should closely monitor key support levels, as a break could accelerate a cascading sell-off in the Ethereum market.