Ethereum Plunges Below $3,100 as ETF Exodus Sparks ’High-Risk’ Label vs Bitcoin

Ethereum takes a brutal hit as institutional investors flee spot ETFs—dropping below $3,100 while analysts tag it as the 'volatile little brother' to Bitcoin's steady giant.

Why the sell-off? Traders are dumping ETH positions after last week's shocking $120M net outflows from funds. Meanwhile, Bitcoin ETFs held steady (because Wall Street still loves its 'digital gold' narrative).

Cynical take: When the crypto market sneezes, altcoins catch pneumonia—and ETH just became patient zero.

In brief

• Ethereum fell below $3,100 for the first time since early November as the broader crypto market lost momentum.
• Spot ETH ETFs have experienced consistent outflows over the past weeks signaling reduced confidence among investors.
• Timothy Peterson said the market currently views Ethereum as carrying a higher degree of risk than Bitcoin.

ETF Outflows Deepen Ethereum’s Downtrend

Ethereum’s latest slide comes as the second-largest cryptocurrency remains stuck in a bearish patch, with its spot ETF products experiencing steady withdrawals. Spot ether ETFs experienced capital withdrawals in four of the past five weeks, accounting for roughly 7% of the cost-basis capital investors had originally committed, according to Timothy Peterson, a digital-asset researcher at Cane Island Alternative Advisors.

Across the same period, Peterson noted that Bitcoin ETFs saw withdrawals of about 4%, and he interprets the smaller level of exiting capital as evidence that investors currently view Ethereum as carrying a higher degree of risk than Bitcoin. Both assets recorded outflows last week, with spot Bitcoin ETFs losing $1.11 billion and spot Ethereum ETFs seeing $728.56 million leave—figures that extend the pattern observed in recent weeks.

So, what then is the concept of cost-basis capital, and what does it mean for Ethereum?

• Cost-basis capital refers to the initial money investors commit to an ETF before any gains or losses occur, representing the core funding added by long-term holders.
• When redemptions start eating into this original pool, it is often seen as a sign of weakening confidence among established investors rather than short-term trading behavior.
• By focusing solely on committed capital rather than daily inflows and outflows, it provides a clearer picture of investor sentiment during volatile periods.

On-Chain Data Adds to Signs of Rising Market Caution

On-chain data from Glassnode also supports the idea of rising caution among investors. In August, as Ethereum began sliding from its recent high, wallets holding coins for three to ten years sharply accelerated their average daily distributions. Their activity now exceeds 45,000 ETH per day on a 90-day moving basis, marking the highest level of long-term holder spending since February 2021.

With the new week beginning, attention is on whether ETF outflows might ease or continue building, particularly after Ethereum fell below $3,100 on Sunday. Observers will also be watching how the token responds around key support and resistance levels in the days ahead.

Longer-Term Views Add a Different Perspective

Despite the short-term pressure, some analysts maintain a bullish perspective. Tom Lee, executive chairman of BitMine Immersion Technologies, highlighted that Ethereum could be entering a “supercycle” similar to Bitcoin’s extended growth period. Bitcoin’s rise over the past eight and a half years included six corrections of more than 50% and three exceeding 75%. 

According to Lee, these significant swings reflect a market trying to incorporate a large long-term potential. Investors who remain invested through these volatile phases may benefit from substantial gains over time.

Short-Term Technical Pressure Weighs on Ethereum

However, in the short term, technical indicators add to the bearish outlook for Ethereum. The price is testing key support levels, and the moving averages reinforce the downtrend. The 50-day SMA is sloping down with the price below it, indicating short-term weakness, while the 100-day SMA is flattening and turning downward, signaling that the medium-term trend has also turned negative.

A bearish crossover has formed, with the 50-day SMA crossing below the 100-day SMA, confirming the shift into a downtrend. Overall, price sits below both SMAs, both pointing downward, making the daily chart clearly bearish. For any recovery, buyers must push Ethereum back above these averages.

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