Ethereum Updates: DeFi TVL Drop Triggers Downward Trend for Ethereum

Ethereum (ETH) is under increasing strain as long-term investors sell off large amounts and overall market sentiment turns negative, sparking fears that the price could fall to $2,500. The digital asset, which

, has been hit by several negative factors, such as a steep drop in decentralized finance (DeFi) activity, declining interest from institutions, and technical signals pointing to further losses.

The DeFi industry, which is a major source of

, has seen a sharp fall in total value locked (TVL). from $172 billion at the start of October to $136.26 billion by November, erasing more than $36 billion in value. Leading protocols such as , Lido, and have all reported TVL drops between 8% and 40%, highlighting a broad slowdown across the network. This pullback has happened even though Ethereum’s price surged earlier this year, indicating that DeFi is no longer driving demand growth.

Adding to the challenges, institutional appetite for Ethereum has diminished.

and exchange-traded funds (ETFs) decreased from 12.95 million ETH in October to 12.75 million ETH in November. Although ETF inflows briefly picked up on November 6, outflows resumed the next day, reflecting shaky investor confidence. could intensify selling, especially as economic uncertainty and a lack of major catalysts weigh on the market.

Technical analysis also supports the bearish outlook. Ethereum’s price slid 7% to $3,170 in early November,

for large holders with balances between 10,000 and 100,000 ETH (about $2,900). Realized losses have topped $100 million since Sunday, a level that has previously led to steep selloffs, such as the 50% price drop over three months in late January 2025. The 50-day and 100-day exponential moving averages (EMAs) now serve as crucial support, $2,850.

Both retail and institutional demand remain weak.

has stayed below 12 million ETH since October 10, and the RSI and MACD continue to . —where the 50-day EMA drops below the 100-day EMA—has further fueled bearish expectations, making a prolonged decline more likely.

Despite these obstacles, some market watchers remain cautiously hopeful.

points to $3,700 as a significant resistance point, and the recent stabilization of the broader crypto market could provide some support. Still, with DeFi TVL and retail sentiment at their lowest in years, Ethereum’s most probable direction appears to be downward.