Ethereum continues to underperform compared to the broader crypto market, with the price of Ether (ETH) slipping below the critical $1,500 level. The ongoing decline is fueled by a combination of bearish technical signals, weak institutional demand, and a shift in user activity toward rival blockchains.

One of the most concerning signs for Ethereum is that its price has dropped below the realized price, a key on-chain metric. The realized price is calculated based on the average price at which each ETH coin last moved on the blockchain. When the spot price falls below this level, it often signals widespread investor losses and triggers panic selling. Historically, such dips have marked periods of capitulation, with investors losing confidence and offloading their holdings. Notably, similar trends preceded the sharp ETH price drops in June and November 2022, following the Terra Luna crash and the FTX collapse, respectively.

Currently, Ethereum’s market structure is echoing those past bearish phases, and the absence of strong support levels increases the likelihood of a further decline. Analysts warn that ETH could retest the $1,000 zone if selling pressure intensifies.

Another factor compounding Ethereum’s struggles is the weak performance of spot ETH exchange-traded funds (ETFs). On April 8 alone, over $3.3 million in net outflows were recorded, contributing to a two-week total of $94.1 million in outflows. This sharp decline in institutional interest is a red flag, especially considering that ETF optimism played a crucial role in ETH’s rally in early 2024. Reports from CoinShares also show that Ethereum investment products continue to see consistent capital flight, aligning with the broader negative sentiment.

In addition to declining ETF flows, the derivatives market for ETH reflects growing pessimism. Open interest in Ethereum futures currently sits at $16.7 billion—down nearly 48% from its January peak. Low open interest typically points to reduced speculative demand and trading activity, both of which are necessary to sustain upward momentum in price.

Moreover, funding rates for ETH perpetual futures have turned negative. When funding rates fall below 0%, it indicates that short-sellers are paying to maintain their positions, reinforcing the prevailing bearish outlook. This dynamic often creates further downward pressure as traders anticipate more losses.

Ethereum is also losing ground in terms of network usage and user engagement. Despite the rise of Ethereum layer-2 solutions, high gas fees continue to push users toward more scalable alternatives such as Solana, BNB Chain, and Tron. Over the past 30 days, Ethereum’s unique active wallets interacting with decentralized applications dropped by more than 33%. Meanwhile, platforms like Tron saw a 16% increase in wallet activity, and other layer-1 blockchains like Solana and Avalanche also fared better.

Transaction volume tells a similar story. Ethereum experienced a 40.5% drop in total transactions, while other chains saw more moderate declines or even growth. This shift suggests that Ethereum’s dominant position in the decentralized ecosystem may be weakening.

With no immediate catalyst for a reversal in sight, Ethereum may continue facing downward pressure. Unless sentiment improves or investor demand returns, especially through ETF inflows or increased network activity, ETH’s price risks sliding further before stabilizing.