ethereum price has fallen sharply this year after encountering substantial resistance at the $4,000 level in December.
ethereum (eth) is down nearly 20% from its December high, coinciding with an ongoing selloff in bitcoin and other altcoins.
The slowdown has been partly attributed to outflows from ethereum spot exchange-traded funds. On Wednesday, these funds recorded net outflows of $159 million, after $86 million the previous day. However, despite recent capital outflows, ethereum ETFs have attracted a net inflow of $2.5 billion since their approval in 2024.
The drop in eth also coincided with an increase in exchange balances. According to CoinGlass, the number of eth held on exchanges increased to 15.85 million on January 9, up from 15.3 million on December 30. An increase in stock market balances often indicates that investors are liquidating their holdings.
<img loading="lazy" decoding="async" width="2771" height="832" src="https://crypto.news/app/uploads/2025/01/eth-Balances.jpeg” alt=”ethereum balances on exchanges”/>
From a macroeconomic perspective, eth has been affected by rising US bond yields amid a hawkish stance from the Federal Reserve. The 30-year bond yield rose to 4.96%, its highest level since October 2023. Short- and medium-term bond yields have also continued to rise.
Rising yields suggest the market expects the Federal Reserve to maintain its hawkish stance due to lingering inflation concerns.
ethereum Price Analysis
<img loading="lazy" decoding="async" width="3574" height="1982" src="https://crypto.news/app/uploads/2025/01/ethereum-price.png” alt=”eth price chart”/>
The weekly chart shows that eth encountered significant resistance at the $4,000 level, which it has struggled to overcome since March last year.
Despite the recent pullback, the cryptocurrency remains above the 50-week and 100-week moving averages, indicating that the bulls still maintain some control.
Notably, ethereum is gradually forming an inverse head and shoulders pattern, a widely recognized bullish reversal signal. The “head” is at $2,155, while the “left shoulder” was formed at $2,825. As long as eth remains above the shoulders at $2,825, the bullish outlook will remain intact.
A confirmed breakout would occur if eth moves above the neckline at $4,085. If this happens, the next levels to watch are the all-time high of $4,865 and the psychological milestone of $5,000. However, a fall below the right shoulder at $2,825 would invalidate the bullish view.
