Ethereum approaches critical level after prolonged decline – crypto market overview

Ethereum, the second-largest cryptocurrency by market cap after Bitcoin, is undergoing a serious correction. In November, pressure on the digital asset noticeably intensified: after unsuccessful attempts to hold above $2,400–2,500, prices went down, and on November 12, ETH fell below the psychological mark of $2,000 for the first time since August.

During the trading session, the price reached approximately $1,996, after which buyers attempted to return quotes above the round level. However, the rebound does not yet change the overall picture: over the month, ether has lost about 20%, and since the beginning of the year its decline is about 32%.

The reasons for the fall are not only related to internal problems of the crypto market. ETH is simultaneously influenced by political events in the US, tough expectations regarding the Fed's policy, sell-offs of technology stocks, capital outflow from ETFs, and declining investor interest in risky assets.

Why Ethereum is getting cheaper: key factors

1. US midterm elections increased uncertainty

One of the important events for the cryptocurrency market was the US congressional elections on November 3. The victory of the Democrats and their establishment of control over both chambers caused a mixed reaction from investors.

On the one hand, part of the market hoped for more predictable economic policy. On the other hand, there were concerns that the new Congress could slow down the adoption of cryptocurrency regulation legislation.

In particular, the prospects for advancing the CLARITY Act, which should form clearer rules for the American cryptocurrency market, were called into question.

Against this background, investors began to reduce positions in digital assets. On November 8, ether fell to about $2,223, reaching minimum values since August.

2. US inflation and expectations of Fed rate hikes

Another serious negative factor is American macroeconomic statistics.

October inflation in the US came in above forecasts: consumer prices rose by 0.4% month-over-month, core inflation by 0.3%.

This reinforced concerns that the Federal Reserve not only will not rush to cut interest rates, but may also consider the possibility of raising them.

For Ethereum, this is bad news. The higher the yield of traditional financial instruments, the less incentive investors have to put money into volatile digital assets.

In addition, the rising cost of borrowed money reduces the ability of speculative investors to use leverage.

3. Outflow of funds from Ethereum ETFs

A particularly alarming situation is developing with American exchange-traded funds investing directly in ether.

In November, institutional investors actively withdrew money from spot Ethereum ETFs:

• November 2 outflow was $139.7 million;
• November 3 — $85.3 million;
• November 5 — $99.9 million;
• November 6 — $93.3 million;
• November 9 — $184.6 million;
• November 11 — another $144.8 million.

Thus, for the listed trading sessions, the outflow exceeded $747 million. The BlackRock ETHA fund played a particularly notable role in the sell-offs.

This is an important signal: institutional demand, which previously supported the value of Ethereum, is now significantly weakened.

4. Sell-off of technology stocks and liquidation of traders’ positions

In early November, problems also arose in the American stock market. Technology companies were particularly hard hit, including semiconductor manufacturers and companies related to artificial intelligence.

On November 5, the Nasdaq index lost about 5.5%, which triggered an additional wave of cryptocurrency selling.

Ethereum turned out to be especially vulnerable. According to CoinGlass, on November 6, more than $210 million in ETH positions were liquidated, with about $179 million coming from traders who bet on the price rising.

Forced closure of long positions intensified the decline: the price drop triggered new liquidations, which created additional pressure on quotes.

5. Aftermath of Binance problems and declining trust in the crypto market

An additional negative factor was the story of a large-scale theft of funds in the Binance ecosystem, with damage estimated at about $6.3 billion.

Although this story is not directly related to the Ethereum protocol, it hit investors' trust in the entire cryptocurrency infrastructure.

Market participants became more cautious about storing assets on centralized platforms, transfers between exchanges, and using borrowed funds.

In conditions of a general decline in prices, such events increase investors' desire to temporarily exit cryptocurrencies.

Technical picture: where support and resistance levels for ETH are

From a technical standpoint, Ethereum is in a downtrend. After losing the $2,200 area, sellers gained an additional advantage, and the psychological level of $2,000 became an important line of defense for buyers.

Key ETH/USD levels

Strong resistance $2 500 Important milestone for restoring the medium-term trend

Nearest resistance $2,300–2 350 Zone that buyers need to overcome

Psychological support $2 000 Round level, near which buyers have already appeared

Next support $1 900

Deeper support $1,800

If ETH can hold above $2,000, an attempt to recover to $2,200–2,350 is possible. Consolidation above $2,350 will be the first serious signal of improvement.

However, if sellers push the price below $2,000 again, the next targets may be $1,900 and $1,800.

Ethereum forecast for the next month: three scenarios

On the horizon of the next four weeks, I would single out three development options.

Optimistic scenario. If US inflation starts to slow down, expectations of Fed rate hikes weaken, and institutional investors return to buying Ethereum ETFs, ether could recover to $2,400–2,500. With improvement in the overall crypto market situation, further growth to $2,700 is possible.

Base scenario. The most cautious option assumes continued trading in the $1,900–2,300 range. Investors will wait for new signals from the Fed, monitor flows into ETFs, and assess Bitcoin prospects. Under such conditions, sharp fluctuations in ETH are quite likely.

Negative scenario. If the outflow from ETFs continues and Bitcoin remains under pressure, Ethereum could consolidate below $2,000. In that case, the next downside targets would be $1,900 and $1,800. During a large-scale cryptocurrency sell-off, a move to $1,600 cannot be ruled out either.

Summary: should we expect Ethereum’s recovery?

In the coming month, Ethereum’s prospects remain ambiguous. On the one hand, the price decline has already led to the emergence of buyers who consider ETH an undervalued asset. Some large market participants continue to accumulate coins even during the fall. For example, amid the sell-offs, certain large investors and BitMine continued buying ether.

On the other hand, there are no convincing signs of a market reversal yet. Outflows from ETFs, high US inflation, and weakness in technology stocks continue to limit the recovery potential.

My forecast: in the next four weeks, the risks of further ETH decline are still higher than the probability of a quick return to $2,500–2,700. The key level to watch is $2,000. If Ethereum can hold above it and institutional demand begins to recover, there will be an opportunity for a technical rebound. If the support fails, ether could continue its decline to $1,800–1,900.

At the same time, Ethereum’s long-term prospects should not be assessed solely by the current drop. The development of DeFi, tokenization of real assets, stablecoins, and the use of the network for financial applications retain fundamental importance for the project. But in the short term, it is macroeconomics and the movement of institutional capital that will determine the direction of the price.