Ethereum Price Faces Deeper Downside Risk as October ETH ETF Outflows Reach $1 Billion

Ethereum (CRYPTO: ETH) fell for a fourth consecutive day, reaching a low of $2,330, which is 16.8% below its September high. The retreat may continue in the near term as outflows from spot Ether ETFs climb and a head-and-shoulders pattern takes shape.

Spot Ethereum ETF Outflows are Rising

American investors are selling their Ether ETFs aggressively this month as the recent rally unwinds. Spot Ether ETFs have suffered more than $1 billion in outflows, the largest of any product category in the crypto industry. These are the biggest outflows since November last year, when the funds lost $1.45 billion. It is also the first monthly net outflow for these funds since June.

Ethereum’s ETF outflows are much higher than other coins. Bitcoin (CRYPTO: BTC) funds have had over $145 million in outflows this month, while Solana (CRYPTO: SOL) and XRP funds have added assets. 

ETH ETFs have shed assets as sentiment in the crypto industry worsened. The Crypto Fear and Greed Index has moved from the greed zone of 76 to the neutral level of 44. It has been in a steady downward trend in the past few weeks. 

At the same time, the ongoing geopolitical jitters are having an impact on the crypto market. There are rising odds that the US and Iran will relaunch their kinetic activity in the coming weeks, which explains why crude oil prices have continued rising. Saudi Arabia and the Houthis have continued fighting, while Russia and Ukraine are escalating. 

Ethereum’s core metrics are also falling. DeFi Llama data shows that the average daily active addresses has dropped to 491,000 from last month’s 563,000. Also, the total value locked in its decentralized finance (DeFi) ecosystem has continued falling. 

Ethereum Price Technical Analysis

Technicals point to more Ethereum weakness. The coin has formed a head and shoulders pattern, a common bearish reversal signal in technical analysis. Both lines of the MACD indicator have fallen below the zero line and are pointing downward.

ETH has also dropped below the 50-day Exponential Moving Average (EMA), and the Supertrend indicator has turned red. These signals suggest the token will likely keep falling, potentially to the psychological level of $2,000. A move above the resistance level of $2,500 would invalidate the bearish outlook.

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