Ethereum Falls Below $3,100 as ETF Outflows Accelerate and Market Deems It Risky

As the broader digital asset market lost momentum on Sunday, Ethereum came under renewed pressure, falling below $3,100 for the first time since November 4. At 21:36 UTC, it was trading around $3,066 and is currently near $3,190. The decline was further compounded by continued outflows from spot ETH ETFs, reflecting that investors currently perceive Ethereum as riskier than Bitcoin.

ETF Outflows Amplify Ethereum Downtrend

Ethereum's latest fall comes as the second-largest cryptocurrency remains stuck in a bearish phase, with its spot ETF products experiencing regular drawdowns. Spot ether ETFs have suffered withdrawals in four of the last five weeks, representing about 7% of the base capital initially committed by investors, according to Timothy Peterson, digital assets researcher at Cane Island Alternative Advisors.

Over the same period, Peterson noted that Bitcoin ETFs saw outflows of around 4%which he interprets as evidence that investors currently view Ethereum as riskier than Bitcoin. Both assets saw outflows last week, with spot Bitcoin ETFs losing $1.11 billion and spot Ethereum ETFs losing $728.56 million — numbers that continue the trend seen in recent weeks.

So, what is the concept of capital base, and what does it mean for Ethereum?

• Core capital refers to the initial money that investors commit to an ETF before any gains or losses occur, representing the primary funding added by long-term holders.
• When redemptions begin to eat away at this original pool, it is often seen as a sign of weakened confidence among established investors rather than short-term trading behavior.
• By focusing solely on committed capital rather than daily inflows and outflows, this provides a clearer picture of investor sentiment during volatile times.

On-chain data adds signs of increased caution in the market

Glassnode's on-chain data also confirms the idea of ​​growing caution among investors. In August, as Ethereum began to fall from its recent high, wallets holding coins for three to ten years sharply accelerated their average daily distributions. Their activity now exceeds 45,000 ETH per day on a 90-day rolling basis, marking the highest level of long-term holder spending since February 2021.

With the start of the new week, attention is shifting to the possibility that ETF outflows will slow down or continue to pile up, particularly after Ethereum fell below $3,100 on Sunday. Observers will also monitor the token's reaction around key support and resistance levels in the coming days.

Longer term perspectives bring a different angle

Despite the short-term pressure, some analysts maintain a bullish view. Tom Lee, executive chairman of BitMine Immersion Technologies, pointed out that Ethereum could enter a “supercycle” similar to Bitcoin's long period of growth. Bitcoin's rise over the past eight and a half years has included six corrections above 50% and three above 75%.

According to Lee, these large swings reflect a market looking to price in great long-term potential. Investors who stay invested during these volatile phases can enjoy substantial gains over time.

Short-term technical pressure weighs on Ethereum

However, in the short term, technical indicators reinforce the bearish outlook for Ethereum. Price is testing key support levels, and moving averages confirm the downtrend. The 50-day SMA is sloping downward with price below, indicating near-term weakness, while the 100-day SMA is flattening and then trending lower, signaling that the medium-term trend has also turned negative.

A bearish crossover has formed, with the 50-day SMA crossing below the 100-day SMA, confirming the move into a downtrend. Overall, price is below both SMAs, both of which are pointing downward, making the daily chart clearly bearish. For any recovery, buyers must push Ethereum above these averages.