Ethereum's recent price decline, despite positive market developments, has left investors puzzled. Trading at $3,400 on December 29, Ethereum has fallen by over 17% from its earlier peak this month. The price drop occurred even as Ethereum ETFs gained significant momentum and staking activity reached record levels.
Spot ETFs have seen consistent inflows, totaling $2.68 billion, with BlackRock’s Ethereum ETF holding $3.58 billion in assets. Grayscale, Fidelity, and Bitwise have also contributed to the rising net assets of Ethereum-focused funds, which now exceed $12.1 billion.
Market Trends and Ethereum Price Analysis
Despite Ethereum's strong fundamentals, its price has been influenced by external factors, including Federal Reserve policies. The Fed's recent hawkish tone and decision to maintain higher interest rates have dampened the appeal of risk assets like cryptocurrencies. Ethereum, along with Bitcoin and Solana, has experienced significant pullbacks.
Technically, Ethereum is at a critical juncture. The coin retreated from $4,000, an extreme resistance level on the Murrey Math Lines, and now hovers around $3,400. The daily chart shows a bearish double-top pattern with a neckline at $3,526, indicating potential further declines.
Ethereum Staking Inflows
Additionally, Ethereum staking inflows demonstrate long-term bullish sentiment. Data shows that over 55.18 million ETH have been staked, with a staking market cap of $114.95 billion. The increasing number of participants — now more than 206,000 — reflects strong confidence in Ethereum's future. Staking rewards, averaging 3.06%, provide further incentive for investors to hold their tokens.
Staking allows Ethereum holders to secure the network while earning passive income from transaction fees. This mechanism has proven resilient, even as market volatility persists. Moreover, Ethereum remains a dominant force in decentralized finance (DeFi), with over $73.7 billion in total value locked (TVL) across its ecosystem.
Spot ETFs have also played a crucial role in fostering institutional interest. Investors are flocking to Ethereum ETFs in anticipation of regulatory changes that might allow staking within these funds.
Final Thoughts: Can Ethereum Rebound?
Despite the current Ethereum price slump, technical analysts see room for optimism. Ethereum’s recent drop aligns with the fourth wave of the Elliott Wave Theory—a pattern suggesting a bearish phase before a bullish fifth wave emerges. If this theory holds, analysts predict that ETH could soon recover and target resistance levels around $3,750 or higher.
On the daily chart, Ethereum has retreated below the pivotal $3,437 level but remains above the 100-day moving average. This indicates that while short-term momentum is weak, underlying buying pressure persists. The accumulation/distribution indicator also shows signs of increasing investor interest, hinting at a potential price rebound.
However, a bearish double-top pattern at $4,090 has put downward pressure on ETH. This pattern suggests further declines if Ethereum fails to reclaim critical support levels, such as $3,526. Conversely, a breakout above $4,090 would confirm renewed bullish momentum, possibly pushing ETH closer to $5,000 in the medium term.
With strong fundamentals like surging staking inflows and institutional adoption through ETFs, Ethereum’s long-term outlook remains promising. Still, macroeconomic factors and market sentiment will likely dictate its near-term trajectory.