Ethereum (ETH) has been under significant pressure recently, with its price plummeting by over 56% since early December. As of April 2, ETH is trading at around $1,869, marking a steep decline in value. This drop can be attributed to a combination of macroeconomic factors, such as ongoing trade wars, global economic instability, and a reduction in institutional demand. Despite Ethereum’s established position in the cryptocurrency market, its recent performance highlights just how much external factors can influence the price of even the most dominant digital assets.

Decreased Institutional Demand

One of the key factors driving Ethereum’s price decline is the noticeable drop in institutional demand. Recently, the U.S. spot Ether ETF experienced a net cash outflow of approximately $403 million, a clear sign that institutional investors are pulling back from ETH. This has contributed to the overall low demand for Ether. Moreover, on-chain data from Santiment reveals that whale activity has significantly slowed down, with large holders of Ethereum reducing their positions. In the past two weeks, whales with between 100,000 and 1 million ETH sold roughly 760 ETH, now holding a total of 18.81 million ETH. This decrease in whale activity further suggests a bearish sentiment surrounding Ethereum.

Whale Activity Declines

Ethereum whales play a significant role in the altcoin’s price movements, and their reduced participation in the market adds to the bearish outlook. Ethereum’s price has historically been influenced by large transactions, with institutional investors and whales moving substantial amounts of ETH. However, since February 25, whale activity on the Ethereum network has dropped by 63%, indicating a lack of buying interest from large holders. This decline in whale-driven activity leaves Ethereum vulnerable to further losses, especially as institutional demand remains low and broader economic conditions worsen.

Technical Indicators Point to Bearish Trend

From a technical analysis perspective, Ethereum is currently testing critical support levels that could determine its next price move. The price of ETH has consistently closed below the 200-week Simple Moving Average (SMA), a long-term trend indicator that signals a bearish market environment. For the past four weeks, Ethereum has been hovering just above the $1,800 support level. If ETH fails to hold this level, it could face further declines, potentially triggering a larger sell-off across the altcoin market. A break below the rising weekly logarithmic trendline would signal a major shift towards the downside, confirming a bearish outlook for Ethereum.

Potential for a Reversal

Despite the current downtrend, there are signs that Ethereum could experience a reversal if certain conditions align. The weekly Relative Strength Index (RSI) is currently in oversold territory, which often signals that an asset is undervalued and may be due for a rebound. A rise in buying activity from retail traders or a shift in institutional sentiment could help Ethereum reverse its current trajectory. Analysts remain cautiously optimistic, anticipating that the broader cryptocurrency market may see improvement in Q2 2025 after a challenging first quarter. If market conditions stabilize and demand for Ethereum picks up, the altcoin could begin to recover.

Conclusion

Ethereum’s current price action shows a significant decline, driven by reduced institutional interest and negative macroeconomic factors. The coin is now hovering at a critical support level around $1,800, and a break below this point could lead to further losses. However, the oversold RSI indicates that a potential rebound is possible if market sentiment improves. Investors and traders alike will need to closely monitor Ethereum’s performance over the next few weeks to assess whether it can hold key support levels or if the bearish trend will continue.