Ethereum falls into a descending flag pattern, institutional divestment worsens the short-term dilemma

Ethereum (ETH) current price is $3.00K, with a 24-hour decline of -7.19%. As the crypto market remains in narrow consolidation, Ethereum’s performance appears particularly uncertain, unable to establish an upward momentum or a clear downward trend. The market hesitation caused by shrinking volatility is testing the patience of every trader.

Price Stalemate: Repeated Tug-of-War in Falling Flag Pattern

On the daily chart, Ethereum is oscillating between the long-term downtrend line and the $2,500 strong support level, with dynamic resistance continuously suppressing price advances. Although buying interest appears from time to time, it has yet to break free from the trend line constraints, with selling pressure still dominant.

The $2,500 level has become a lifeline below. Whenever selling pressure approaches this zone, bulls quickly step in to prevent deeper corrections. This tug-of-war has caused Ethereum to be stuck in a narrow range, with daily closes within this sideways band, and consolidation continues.

The four-hour chart better reveals the current market dilemma. Ethereum attempted an upward breakout within the falling flag pattern, but this rebound was ultimately a false breakout. After briefly breaking below support, the price quickly rebounded but still lacks confirmation of a strong upward trend. This indicates that the current rebound is merely a technical correction, not a reversal signal.

Institutional Indifference: Large ETF Redemptions Shift

The technical stalemate is only superficial; on-chain data further confirms the market’s cautious attitude. Since mid-December last year, spot Ethereum ETFs have experienced significant net outflows of institutional funds. Among them, BlackRock’s ETF has seen substantial redemptions, with weekly outflows exceeding $600 million, reflecting the current low risk appetite among institutional investors.

The timing of these redemptions is particularly delicate—large-scale fund withdrawals at the beginning of the week directly weakened Ethereum’s ability to hold the key support level, becoming an important driver of recent downward pressure. Institutional investors are actively reducing their positions at current levels, which is undoubtedly a bearish factor for the short-term market.

Ecosystem Diversification: On-Chain Demand Under Pressure

It is also worth noting that subtle changes are occurring within the Ethereum ecosystem. Recently, transaction volumes on Layer-2 projects have surged, with transaction fees significantly decreasing, as users gradually migrate to these side-chain solutions. While this long-term development helps enhance Ethereum’s scalability and overall competitiveness, in the short term, it puts pressure on the mainnet demand, which is an implicit factor behind the current lack of active trading to push prices higher.

With no clear technical breakout, ongoing net outflows of institutional funds, and ecosystem user migration, Ethereum is unlikely to see a turnaround in the near term. The stability of the key level $2,500 will determine the next market direction—holding this level could alleviate the downtrend, while losing it may trigger further adjustments.