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Ethereum Price Analysis: Will ETH Recover After Recent Outflows

Ethereum Price Analysis

Ethereum (ETH) has been facing increasing volatility in the market, particularly with a widening gap in price action between Bitcoin (BTC) and ETH. As digital assets and web3 protocols gain mainstream adoption, the historical correlation between Bitcoin’s bull runs and the altcoin season is weakening. This is mainly due to the influx of new altcoins in the market, which has diluted the available liquidity. The market dynamics are shifting, and Ethereum’s price is feeling the effects.

In the wake of last year’s approval of spot Bitcoin and Ethereum ETFs in the United States, the traditional crypto cash rotation cycle is not thriving as in previous bull markets. Unlike the altcoin seasons of the past, the next potential rally led by Ethereum will likely be driven by new capital flowing into projects with solid fundamentals and real-world utility. For Ethereum, this means that recovery might take longer, but it could also open the door for a more sustainable rally once the market stabilizes.

Ethereum Faces Short-Term Setbacks as Whales Show Caution

The short-term outlook for Ethereum remains somewhat cautious. Since the start of 2025, the overall supply of Ether on centralized exchanges (CEXes) has seen a noticeable increase—from 15.39 million to about 16.04 million ETH. This growing supply on exchanges has been a dampener for bullish sentiment, as it suggests that more ETH is potentially being sold or prepared for sale.

Adding to the bearish pressure, the US spot Ethereum ETFs have been experiencing a significant slowdown in cash inflows. In fact, since the beginning of the week, US spot Ether ETFs have seen a net cash outflow of approximately $141 million, signaling that investor confidence may be waning.

On-chain data from Glassnode further supports this sentiment, as long-term Ether investors have shown signs of uncertainty over the last few months. This shift from optimism to caution has been a contributing factor in Ethereum’s price struggles.

Ethereum’s Technical Outlook: Support Zones and Potential for Recovery

Despite the recent setbacks, Ethereum’s technical analysis reveals that there are key support levels that could help cushion any further downside. According to crypto analyst Ali Martinez, a critical support zone for Ether lies between $2,230 and $2,610. This range is bolstered by nearly 12 million wallets holding over 62 million ETH, making it a significant accumulation area. Should Ethereum’s price approach these levels, it could provide a strong base for recovery, especially if investor confidence returns.

Looking ahead, crypto analyst Benjamin Cowen has predicted that Ethereum might experience a downturn before any bullish recovery takes place. Cowen points out that Bitcoin’s dominance continues to grow, which could weigh heavily on altcoins, including Ethereum. Additionally, the Federal Reserve’s hesitation to implement a Quantitative Easing (QE) program, similar to Canada’s, has raised concerns about the overall liquidity in the market.

However, once Ethereum stabilizes and if broader market conditions improve, ETH could see a strong rebound. This recovery could be supported by the fundamentals of Ethereum, including the ongoing development of Ethereum 2.0 and its transition to proof-of-stake, which could make the network more scalable and energy-efficient.

What’s Next for Ethereum?

For now, Ethereum is caught in a tug-of-war between market sentiment and fundamental progress. The increase in supply on exchanges and the shrinking inflows into Ethereum ETFs may continue to weigh on the price in the short term. However, the key support levels between $2,230 and $2,610 could act as a buffer, providing an opportunity for a price bounce.

Looking longer term, Ethereum’s price action will depend on how the broader crypto market evolves. As Bitcoin dominance continues to increase, Ethereum might face additional challenges, but once the market settles, ETH could see renewed interest from institutional investors, developers, and retail traders alike. Ethereum’s continued technological advancements and its role in the growing decentralized finance (DeFi) space will likely play a pivotal role in its recovery.

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MikeT

Mike T, an accomplished crypto journalist, has been captivating audiences with her in-depth analysis and insightful reporting on the ever-evolving blockchain and cryptocurrency landscape. With a keen eye for market trends and a talent for breaking down complex concepts, Mike's work has become essential reading for both crypto enthusiasts and newcomers alike. Appreciate the work? Send a tip to: 0x4C6D67705aF449f0C0102D4C7C693ad4A64926e9

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