The price of Ethereum is oscillating above the $2,000 level, and is facing significant downward pressure with a prominent bearish banner pattern appearing on the daily chart, coinciding with the decline in network activity and the return of Ethereum supply inflation, which could pave the way for a sharp drop towards $1200. This bearish technical situation is occurring despite news of institutional adoption increasing through the launch of stablecoins issued by banks on the network.
The Ethereum/US dollar (ETH/USD) price movement over the past month culminated in the formation of a clear bearish banner pattern on the daily chart. This pattern is usually followed by a sharp fall (flagpole) and a subsequent consolidation period, which is a bearish continuation pattern.
A confirmed breakdown below the lower end of this pattern – currently around the 2,000 USD level – signals the beginning of a sharp decline. Measuring the height of the original flagpole, which indicates a possible price of approximately $1,230, which represents a decrease of approximately 40% from current prices, helps predict the target of this collapse.
Declining network activity and low transaction fees to an all-time low indicate weak demand
Alarming supply chain statistics also support this negative technical trend. The number of daily transactions on Ethereum has fallen to levels not seen in October 2024 before the US presidential election. Even more shockingly, on March 24, average transaction fees on the Ethereum network fell to an all-time low of just $0.46 (0.00025 Ethereum).
A decrease in the number of transactions and fees indicates a marked decrease in demand for cluster space – whether for decentralized finance (DeFi), non-fungible tokens (NFTs), or other decentralized applications (DApps). Historically, low network activity has been associated with declining investor interest and market confidence, resulting in a lower Ether price.
Upcoming Volatility in Ethereum Prices: Derive Forecast
Ethereum could enter a phase of extreme volatility, according to the latest forecast from decentralized options platform Derive, which points to signs of a breakthrough despite bearish indicators in the near term.
Nick Forster, founder of DeReve, told Decrypt that Ethereum’s implied volatility is currently approaching monthly lows, with maturities of 7 and 30 days reaching 59% and 45%, respectively. “Historically, these low levels rarely hold,” he said, adding that April could mark the beginning of a sharp rise in Ethereum’s volatility.
Despite the easing of volatility, Ethereum’s forward interest rate – a measure of expected future value – is currently lower than the 5% US Treasuries price, indicating weakening near-term confidence.
However, Forster said such conditions preceded price hikes in the past. “When forward interest rates are so low, we often see sharp price increases in the following weeks, as leveraged positions become more attractive and demand increases,” he said.
The circulating supply of Ethereum on central exchanges has fallen to a nine-year low, which could amplify any price reaction in the event of a surge in demand.
Derive estimates that Ethereum will fall below $1,800 by the end of May, but there’s a 19% chance it will rise above $2,500.
Ethereum saw $86 million in outflows last week, compared to $724 million in bitcoin.
Short-term sentiment may favor Bitcoin, but the Ethereum Foundation’s roadmap, including Etheralize and the Pictra upgrade, could shift organizations’ attention to Ethereum again in the second half of 2025. This pattern is usually followed by a sharp fall (flagpole) and a subsequent consolidation period, which is a bearish continuation pattern
Bitcoin Rises, Ethereum Faces Demand Challenges
The price of Bitcoin (BTC), the most popular and largest digital currency by market capitalization in the world, rose nearly 1.68% to about $88,027.69. Meanwhile, the price of Ethereum (ETH), the second-largest cryptocurrency by market capitalization, fell 1%, according to data from Binance.
The return of inflation to the Ethereum supply is a key factor in fueling this pessimism. Daily Ethereum consumption has fallen to an all-time low as transaction fees drop. Consequently, the expected Ethereum consumption rate has decreased significantly, resulting in an annual increase in the Ethereum supply by 0.76%. Equivalent to about 945,000 additional Ether units issued annually.
This reverses the deflationary situation that began after the successful proof-of-stake (merger) in September 2022, where some transaction fees were consumed. Ethereum’s total supply now exceeds pre-consolidation levels, nullifying the main positive narrative about the rarity of this asset.
Bank stablecoin launch heralds a glimmer of institutional adoption
Despite the bleak price picture, the Ethereum network is witnessing clear institutional adoption. Recently, Castudia Bank, in collaboration with Vantage Bank, launched the first stablecoin issued by a bank in America on the Ethereum blockchain.
Using Ethereum’s infrastructure to conduct low-cost. Fast and auditable transactions within a monitored banking environment will transform the region’s payment system. This release, despite pricing challenges, confirms the continued value and acceptance of the Ethereum network
Rhea Segal, research analyst at cryptocurrency exchange Delta Exchange. Stated that the recent resilience of Bitcoin and Ethereum, coupled with Solana’s outstanding performance, underscores the growing impact of institutional engagement in the cryptocurrency market.
