The outlook for Ethereum has darkened considerably in recent days. A wave of institutional selling from U.S.-based spot ETFs pushed the price of ETH briefly below a key psychological threshold, even as underlying blockchain data hints at a tightening supply landscape.
Market Pressure from ETF Redemptions
Institutional investors have been pulling capital from spot Ethereum ETFs at a significant pace. Data from the final week of March shows net outflows totaling nearly $392 million. A single day, March 26, accounted for a further $92.5 million in withdrawals. The BlackRock iShares Ethereum Trust (ETHA) was a notable focal point, experiencing outflows of $140 million in just one trading session.
This selling pressure had an immediate market impact. Ethereum’s price slid to an interim low of $1,975, triggering long position liquidations exceeding $111 million. Although the asset has since found some footing, stabilizing around $2,059, it remains under strain.
Should investors sell immediately? Or is it worth buying Ethereum?
Compounding the issue is Ethereum’s heightened correlation with traditional equities. The 90-day correlation coefficient between ETH and the S&P 500 currently stands at 0.74. With the stock market itself undergoing a corrective phase, Ethereum lacks independent catalysts for upward momentum. This sentiment is reflected in the Crypto Fear & Greed Index, which registers a score of 29, squarely in the “Fear” zone.
Underlying Blockchain Metrics Signal Scarcity
Despite the apparent selling, on-chain analytics present a contrasting narrative of growing supply scarcity. The amount of ETH held on centralized exchange wallets has declined to approximately 15 million tokens—a substantial drop from around 22 million in 2023. Furthermore, roughly 31% of the total ETH supply is now locked in staking protocols, effectively removing it from immediate circulation.
Whether this fundamental supply dynamic can counterbalance the current selling pressure hinges on key technical levels. Market analysts identify $1,911 as a critical support zone. A decisive break below this level could open the door for a test of the $1,750 to $1,850 range. Conversely, for the short-term bearish picture to improve, a sustained move above $2,200 is viewed as a necessary catalyst—a hurdle that has yet to be overcome.
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