3 Ethereum Metrics Indicate Further Downside Ahead

Ethereum's recent performance has been underwhelming compared to Bitcoin and other major cryptocurrencies. After a brief rally to $3,563, leading into the launch of spot Ethereum ETFs ETH has since dropped to $3,289. Over the past seven days, ETH is down 4.3%. Over the last month, it's down 2.11%. In contrast, Bitcoin has risen by 7.7% in the same period. The total cryptocurrency market capitalization has increased by 6.2%.

Several market and technical indicators point to further downside for Ethereum. One such metric is the ETH/BTC ratio. Despite a 5% rise over the past three days, it has declined by 14% between May 23 and July 30. Additionally, outflows from US-based Ether exchange-traded funds (ETFs) have weighed heavily on ETH's price.

Ethereum's network activity has also declined. Data from Glassnode shows daily active addresses (DAA) dropped from 711,078 on June 22 to 426472 on July 10. Solana, a competitor in the layer-1 sector has gained market share in terms of on-chain activity and total fees. According to Artemis, Solana has surpassed Ethereum in daily active addresses and daily transaction volume.

Since their launch on July 23 spot ETH ETFs have seen over $1.23 billion in inflows. However, this has been overshadowed by more than $1.723 billion in net outflows from Grayscale's converted ETHE product. This results in a combined net outflow of $440 million.  

Data from IntoTheBlock's In/Out of the Money Around Price (IOMAP) model shows that this resistance zone is critical. Around 4.18 million addresses have bought approximately 1.93 million ETH within the $3,457 to $3557 range. If sellers dominate this level, ETH's price could fall further.  

The combined effects of ETF outflows, declining network activity, and strong resistance at $3500 suggest that ETH may face more downside before any sustained recovery can occur. Crypto experts should monitor these key metrics closely as they navigate the current market landscape.