Ethereum (ETH) has fallen into a key demand zone, dipping below $2,200 as market sentiment wavers. The price decline aligns with a broader slowdown in Ethereum-based decentralized finance (DeFi) activity and institutional outflows from Ethereum spot exchange-traded funds (ETFs). However, analysts suggest a potential recovery before the monthly close, contingent on ETH reclaiming critical support at $2,196.
ETH has re-entered a long-standing demand zone historically marked by buyer accumulation. This region has previously provided strong support, preventing further declines. Ethereum could rebound and reclaim the $2,196-$3,900 trading range if buying pressure emerges. Failure to do so may lead to extended downside pressure.
Analysts monitoring Ethereum’s price action, including Rekt Capital, note that a strong reaction at this level could allow ETH to re-enter its broader trading range before the monthly close, turning the sub-$2,200 dip into a temporary liquidity event rather than a sustained decline.
The $2,196 price level is critical for Ethereum’s structure. Rekt Capital indicates that if ETH closes March above this threshold, the recent dip would be classified as a liquidity grab or a temporary downward wick rather than a continuation of a bearish trend. Reclaiming this level would validate renewed strength in Ethereum’s price action.
Institutional Outflows Weigh on Market Sentiment
Ethereum ETFs have experienced mixed capital flows, reflecting shifting investor sentiment. While BlackRock (ETHA) and Fidelity (FETH) have attracted significant inflows—$4.1 billion and $1.4 billion, respectively—Grayscale’s high-fee products have faced heavy withdrawals. Grayscale’s ETHE and ETH funds recorded $4.18 billion in net outflows as investors migrated toward lower-cost alternatives.
March 2025 data highlights significant volatility in Ethereum ETF flows. On March 4, Fidelity saw an inflow of $21.7 million, contributing to a total positive net flow of $14.6 million across ETFs.
However, large outflows followed, with Grayscale ETHE losing $63.3 million on March 5 and total ETF outflows reaching $73.6 million on March 13. The overall trend indicates investor caution, particularly as Ethereum struggles to maintain key support levels.
Ethereum’s decentralized finance (DeFi) ecosystem has seen a sharp downturn in trading volume, further pressuring its price. Over the past week, Ethereum’s DEX trading volume dropped 34%, affecting prominent layer-2 networks such as Arbitrum, Polygon, and Base.
At the same time, competitors have gained market share. BNB Chain’s trading volume increased by 27%, while Canto surged 445%, signaling a shift in trader preference. PancakeSwap, operating on BNB Chain, has now surpassed Uniswap in total fees generated, a significant milestone that underscores Ethereum’s weakening dominance in DeFi.
Despite the recent weakness, Ethereum remains within a well-defined macro range between $2,196 and $3,904. If buyers reclaim the lower boundary of this range before the monthly close, ETH could regain momentum toward $3,900.
However, a failure to hold $2,196 would signal continued downside risk, potentially leading to further declines. Ethereum’s upcoming “Pectra” upgrade may play a crucial role in revitalizing investor interest and improving scalability. Until then, market analysts remain cautious, with Ethereum’s standing in the DeFi space increasingly challenged by emerging competitors.
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