Ethereum has been struggling to maintain its momentum this month, as the leading altcoin has experienced a 10% drop in value over the last 20 days. Currently trading at $2,021, the cryptocurrency has seen significant outflows from its spot exchange-traded funds (ETFs), with total withdrawals exceeding $370 million since the beginning of March.

ETF Outflows Reflect Waning Investor Confidence

Ethereum’s spot ETFs have seen 11 consecutive days of outflows, signaling a sustained lack of investor confidence in the cryptocurrency. Data from SosoValue shows that Ethereum’s spot ETFs have experienced a steady stream of capital withdrawals, with only one day of inflows recorded this month. As of now, the total net asset value of Ethereum’s spot ETFs has dropped to $7.01 billion, reflecting a substantial 44% decline year-to-date.

These prolonged outflows from Ethereum ETFs are a clear indicator of bearish sentiment in the market. When ETFs see net outflows, it means that investors are pulling more funds than they are adding, a trend that intensifies selling pressure on the asset. The ongoing outflows have compounded Ethereum’s price struggles, reinforcing the downward momentum that has gripped the market for weeks.

Decline in Open Interest Signals Reduced Market Participation

In addition to ETF outflows, Ethereum has also seen a 20% decrease in its open interest (OI) over the past month. Open interest refers to the total value of outstanding derivative contracts, such as futures and options, that have yet to be settled. As of the latest data, Ethereum’s open interest stands at $6.58 billion.

A reduction in open interest typically suggests that traders are closing their positions rather than opening new ones, which indicates a lack of conviction in the asset’s price direction. This reduced market participation further signals weakening momentum for Ethereum, contributing to the overall negative sentiment surrounding the cryptocurrency. A drop in OI, combined with ETF outflows, paints a picture of uncertainty in the Ethereum market, with fewer traders willing to bet on its short-term price recovery.

Golden Cross on the Horizon: A Potential Turning Point

Despite the ongoing downward trend, there are some signs of a potential recovery for Ethereum. The Moving Average Convergence Divergence (MACD) indicator has recently formed a golden cross, a pattern where the MACD line (blue) crosses above the signal line (orange) on the daily chart. This technical pattern is often seen as a bullish signal, suggesting that upward momentum could be building.

The MACD golden cross is a widely followed technical indicator that traders use to spot potential trend reversals. In this case, the crossover suggests that buying pressure is beginning to outweigh selling pressure, which could lead to a reversal of Ethereum’s current downtrend. If the bullish momentum continues, Ethereum may regain some of its lost value and could potentially reach $2,224.

Risk of Further Decline if Bearish Sentiment Persists

While the golden cross offers hope for a price reversal, there remains a significant risk that Ethereum’s downtrend could continue if bearish sentiment persists. If Ethereum fails to maintain its current support levels, it could dip below the $2,000 mark, potentially reaching $1,924.

The next few weeks will be critical for Ethereum, as traders and investors will closely monitor whether the golden cross leads to a trend reversal or if the continued ETF outflows and declining open interest signal further price declines. The outcome will largely depend on how market participants respond to the growing uncertainty and whether Ethereum can regain the confidence of investors.

Conclusion

Ethereum is currently facing a challenging market environment, with sustained ETF outflows, declining open interest, and bearish sentiment contributing to its ongoing downtrend. However, the formation of a golden cross on the MACD indicator could signal a potential shift in momentum. As Ethereum navigates this volatile period, investors will be closely watching for signs of recovery or further declines. With the cryptocurrency market remaining unpredictable, Ethereum’s short-term outlook will hinge on how it responds to both technical indicators and broader market trends.