Ethereum is struggling to maintain a compelling bullish narrative as market conditions continue to deteriorate and a growing number of analysts begin calling for a broader bear market. After months of heightened volatility and repeated corrective phases, price action alone has failed to restore confidence, making players increasingly cautious.
This hesitation is now clearly reflected in on-chain data, reinforcing the idea that the current weakness is not purely technical, but structural.
According to a recent CryptoQuant report, activity on the Ethereum network has fallen to levels that strongly suggest a withdrawal of retail participation. Active sending addresses have fallen below 170,000, a threshold historically associated with reduced engagement from small investors. In past cycles, retail activity typically expands during bull phases as new participants enter the market, then contracts sharply as confidence fades and price momentum weakens.
Prolonged volatility and price corrective actions have likely eroded Ethereum’s near-term conviction, pushing retail players either to the sidelines or out of the market altogether. This absence matters. Retail flows often play a vital role in maintaining momentum during rallies, and without them, bullish moves tend to fizzle out quickly.
Chain signals indicate exhaustion, not capitulation
According to CryptoOnchain’s analysis, Ethereum’s heavily depressed on-chain activity aligns with a classic phase of seller exhaustion rather than active capitulation. In this regime, selling pressure gradually diminishes as participants willing to withdraw largely have done so, but new demand has not returned in any significant way. The result is a fragile equilibrium in which prices can stabilize, but upside potential remains limited in the absence of new buyers.
The lack of retailer participation plays a central role in this dynamic. Retail flows typically provide the initial momentum during early rebounds, amplifying price movements once confidence begins to recover. With active sending addresses at a year-long low, this catalyst is currently absent, which is part of the reason attempts to move higher have been superficial and short-lived.
However, this same environment has always attracted larger, long-term participants. Institutional and high-conviction holders often accumulate during periods of slow activity, when liquidity is low and sentiment is decidedly negative.
It is important to note that a credible recovery signal would not result from price movements alone. CryptoOnchain highlights that lasting change would require a gradual rebound of active sending addresses alongside price stabilization.
This combination would indicate a return of demand and an improvement in network utilization. Conversely, continued stagnation or further declines in addressing activity would increase the risk that Ethereum enters deeper consolidation or even a phase of demand destruction.
While current conditions highlight clear near-term weakness and retail disengagement, similar on-chain patterns have historically formed near structural lows, creating potential for a medium-term trend change if activity begins to recover.
Ethereum Prices Fight for Key Structural Support
Ethereum price action on the 3-day chart reflects a market caught between structural support and persistent bearish pressure. After failing to hold above the $3,200-$3,300 zone, ETH reversed course and is now consolidating near the $2,850 zone, an area that closely aligns with the 200-day moving average. This level has historically acted as a mid-term inflection point, making it essential for bulls to defend in order to avoid a deeper trend shift.
The recent rejection from highs of $4,000 to $4,800 marks a clearly lower high within the broader structure, reinforcing the idea that momentum has weakened since late 2025. Although price briefly reclaimed the 100-day moving average during the mid-year rebound, it failed to maintain acceptance above it, and ETH has since fallen back below short-term averages. This suggests that rallies are still being sold rather than accumulated aggressively.
Price action aligns with a market transition toward consolidation rather than immediate capitulation. If ETH decisively loses the $2,800-$2,750 support zone, downside risk opens towards the $2,400 region, where long-term trend support converges.
Conversely, any bullish recovery would require ETH to stabilize above the 200-day moving average and reclaim the $3,200 level with expanding volume. Until then, the chart favors a cautious and limited outlook, with downside risks still present.
Featured image from ChatGPT, chart from TradingView.com
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