Ether Faces Bearish Outlook Amid Declining Network Activity

Ether (ETH) is currently exhibiting a bearish trend, as indicated by a bear pennant formation on its daily chart. According to Cointelegraph, this technical setup, coupled with decreasing network activity, suggests a continuation of ETH's downward trajectory, potentially driving the altcoin's price down to $1,100. A bear pennant is a bearish pattern that emerges when the price consolidates within an upward-sloping triangle following a significant price drop. The pattern is expected to resolve if the price falls below the lower trend line at $1,950, which could lead to a further decline matching the previous downtrend's height, targeting $1,100, a 43% decrease from the current price. Crypto analyst Crypto Patel has noted that maintaining the $1,800 support level is crucial to invalidating the pennant. Meanwhile, Ethereum's declining network activity is adding to the downward pressure on Ether's price. The daily transaction count on Ethereum dropped to 1.95 million on Wednesday, a 33% decrease from 2.9 million on February 5. A similar decline in transaction count was observed in January 2024, which coincided with a 30% drop in Ether's price. The total value locked (TVL) in Ethereum's smart contracts has also decreased, falling to $54.5 billion from $70 billion at the start of the month, marking a 22% reduction in just over two weeks. Additional negative indicators include a 26% decrease in deposits on the Uniswap decentralized exchange (DEX) and a 35% drop on platforms like Ether.fi and EigenLayer. The daily trading volume on Ethereum-based DEXs has also seen a significant decline, dropping to $1.5 billion from $3.72 billion during the same period. Furthermore, global Ethereum investment products experienced net outflows totaling $85.1 million between February 9 and February 13, contributing to the ongoing price downtrend.