Since the start of 2025, Ethereum [ETH] has failed to show any significant upward movement. Over the past couple of days, the leading altcoin has plummeted from approximately $3,700 to be valued at $3,324 at the current moment.
Weak demand has been a key factor contributing to Ethereum’s bearish trajectory. Notably, on January 8, outflows from spot Ethereum exchange-traded funds (ETFs) peaked at $159 million as per SoSoValue data.
Marking the second-highest outflow level since their launch in July last year, this flow indicates a decline in interest from not only institutional investors but also retail traders who appear to be engaging in increased selling.
ETH Confronts Significant Selling Pressure
According to data from CryptoQuant, on January 8, net inflows of ETH to spot exchanges totaled 14,143 coins, equivalent to over $46 million. This influx represented the highest volume of positive netflows in almost three weeks.
Subsequently, this surge in inflows led to a spike in exchange reserves, with holdings reaching 8.06 million ETH, marking a week-high accumulation level.
The transfer of more ETH tokens to exchanges signals an inclination among traders to offload their holdings, potentially giving rise to negative market sentiment and a downward price trend upon the dumping of these tokens.
Could Sellers Drive ETH Below $3,000?
Analysis of Ethereum’s weekly chart indicates that a critical support threshold is situated at $2,870. Historical patterns suggest that breaching this support level typically correlates with substantial price declines.
If the current selling momentum persists amid insufficient demand to absorb the surplus supply, ETH might descend further towards the mentioned support level. Nevertheless, the prevailing buying pressure continues to counterbalance the selling activity.
Illustrating this equilibrium is the Relative Strength Index (RSI) gauge, standing at 52 presently, reflecting a near-neutral state of affairs.
In scenarios where neither buyers nor sellers hold dominance, Ethereum could enter a consolidation phase. Yet, it is advisable for traders to monitor the bearish signals presented by the red bars in the Awesome Oscillator (AO) histogram.
Record Highs in Ethereum’s Leverage Ratio
Ethereum’s estimated leverage ratio has surged to 0.605, registering an all-time high and reflecting heightened risk appetite among traders.
This upward trend in the ratio signifies that derivative traders are eager to establish new positions, potentially driven by a growing speculative interest in short-term price movements.
The escalation in leverage levels could precipitate volatile price swings in case of forced liquidations triggered by unforeseen price fluctuations.
Despite the escalating speculative activity, the declining funding rates indicate a waning interest in long positions, signaling a cooling off of bullish sentiment.