Ethereum Faces Critical Test as Support Levels Weaken

Ethereum CRYPTO000ETH

Ethereum finds itself navigating a challenging market environment as the year draws to a close. A confluence of factors, including declining on-chain metrics, persistent outflows from its US-based spot ETFs, and a deteriorating technical picture, has cast a shadow over the asset's near-term prospects. While the network's fundamentals advanced with a recent upgrade, traders are now focused on a single, pressing question: will the current price floor hold, or is another leg down imminent?

Pressure is building from the institutional side. US spot Ethereum ETFs have experienced consistent net outflows over multiple consecutive trading sessions. Recent data indicates a cumulative withdrawal exceeding $224 million from these investment products.

Leading the redemptions is BlackRock's iShares Ethereum Trust (ETHA), which accounts for a significant portion of the recent outflows. Since mid-December, the total assets under management for all US spot ETH ETFs have contracted by several billion dollars. This trend suggests that larger-scale investors are either taking profits or scaling back their exposure, at least in the short term.

The picture isn't entirely one-sided, however. Notable investor Kevin O'Leary has publicly stated he now invests exclusively in Bitcoin and Ethereum, citing their superior regulatory clarity and liquidity. Furthermore, reports indicate that BitMEX has accumulated approximately $140 million worth of ETH. These counterexamples demonstrate that despite the negative ETF flow data, some market participants view current price levels as an opportunity.

On-Chain Activity Signals a Retail Pullback

Concurrent with the institutional flows, on-chain data reveals a pronounced cooling in network activity—a concerning signal for those betting on widespread adoption.

• Declining Active Addresses: The weekly count of active Ethereum addresses has dropped to roughly 324,000, marking a seven-month low. This figure stood near 440,000 at the beginning of the quarter, leading some analysts to describe a tangible retreat by retail users.
• Transaction Volume Slumps: The number of daily transactions has receded to levels last seen in mid-2024, indicating that real-world usage has diminished despite ongoing technical improvements.
• Whale Wallet Movements: On-chain tracking services have reported sales of more than 28,500 ETH by so-called "whale" wallets in a short period. Such substantial movements often create overhead resistance, making a swift price recovery more difficult.

This weakening activity is particularly notable as it follows the Fusaka upgrade, which went live on December 3, 2025. The introduction of "PeerDAS" is designed to enhance data availability and reduce costs for Layer-2 transactions. While a fundamental step forward, the price action resembles a classic "sell the news" event, where the positive technical developments are being overshadowed by broader market weakness.

Technical Analysis Points to Precarious Positioning

From a chart perspective, Ethereum appears vulnerable. The asset is trading well below its 50-day moving average of $3,195.92, confirming a near-term downtrend. The 14-day Relative Strength Index (RSI) sits at 42, placing it in a neutral-to-weak zone and suggesting the market is not yet in oversold territory.

Two key price levels are now in focus:

• Critical Support: Immediate support is clustered between $2,850 and $2,900. A decisive break below this zone could swiftly open the path toward $2,800. Under sustained selling pressure, a deeper decline toward liquidity zones around $2,500 becomes a plausible scenario.
• Overhead Resistance: To the upside, Ethereum must first reclaim the $3,050 level and subsequently overcome the resistance area near $3,200. Only a move above this latter threshold would meaningfully challenge the current bearish structure.

The fact that the price is trading a mere 2% above its 52-week low and approximately 12% below the 50-day moving average underscores the sensitivity of the current technical setup.

Weak Performance Amidst Derivative Market Shake-Out

Ethereum has declined sharply by about 15% over the past seven days, with its current price at $2,826.88. This places the cryptocurrency nearly 40% below its 52-week high and only marginally above its recent annual low—a clear indicator of short-term pressure.

The downturn has been exacerbated by a significant shake-out in the derivatives market. Over the last 24 hours, approximately $650 million worth of crypto positions were liquidated, with Ethereum accounting for roughly $235 million of that total. Long positions were disproportionately affected, amplifying the downward momentum and generating additional selling pressure.

Conclusion: Near-Term Headwinds Versus Long-Term Foundation

In summary, Ethereum is currently contending with an unfavorable mix of subdued retail activity, selling from large holders, and persistent spot ETF outflows. The successful implementation of the Fusaka upgrade and its associated network improvements have done little to alter this dynamic in the short term.

For the weeks ahead, the $2,850 to $2,900 region remains technically decisive. If this support zone holds, a relief rally becomes a likely outcome. However, should ETF outflows and on-chain weakness persist, further declines toward deeper liquidity levels before the year's end represent a realistic possibility.