Ethereum’s ETH price faces a potential decline to $1,200 as it struggles to hold key support levels. With Ethereum’s network activity dropping and ETH supply inflation returning, bearish momentum may push prices lower.
Ethereum Faces Bearish Pressure as Network Activity Declines
Ethereum (ETH) is showing signs of weakness as it retests critical support levels, forming a bear flag pattern—a technical indicator often associated with further downward momentum. If selling pressure increases, ETH could be on track for another significant drop.
The broader market downturn, initially triggered by U.S. tariff concerns, saw ETH plummet nearly 50% from $3,432 (Jan. 31) to a 16-month low of $1,750 (March 11). Although Ethereum has rebounded 18%, it has failed to break above the $2,000 resistance level twice in the past 10 days.
A major contributor to this weakness is declining network activity. Ethereum’s daily transaction count has dropped to levels last seen in October 2024, signaling lower demand for DeFi, NFTs, and DApps. Additionally, ETH transaction fees have hit an all-time low of 0.00025 ETH ($0.46) as of March 24, reflecting reduced demand for block space.
Historically, higher network activity has fueled ETH price surges, as seen during the 2021 DeFi boom, when transaction fees soared to 0.015 ETH due to high demand. The current drop in transactions and fees suggests a lack of market confidence, raising concerns over Ethereum’s short-term price trajectory.
Ethereum’s Return to Inflation: A Threat to Price Stability?
Another bearish factor is Ethereum’s rising supply and declining burn rate. The ETH burn rate—which reduces total supply—has fallen to its lowest level since Ethereum’s transition to proof-of-stake (The Merge) in 2022.
Key Supply Metrics:
- ETH burn rate: Declined to 25,000 ETH per year
- Supply growth: Increased to an annual rate of 0.76%
- ETH issuance: Projected at 945,000 ETH per year
Since April 2024, Ethereum’s total supply has steadily increased, reversing the deflationary effects introduced by EIP-1559 and The Merge. If this trend continues, ETH’s inflationary pressure could limit price recovery and contribute to further downside risk.
Will ETH Drop to $1,200? Key Support and Resistance Levels to Watch
Ethereum’s price is at a crossroads. A break below $1,750 could accelerate losses toward $1,500 and ultimately $1,200, reinforcing the bear flag breakdown. Conversely, a strong push above $2,000 could signal renewed bullish momentum.
Key Price Levels to Watch:
- Resistance: $2,000, followed by $2,063
- Support: $1,750, with a potential drop to $1,200
With Ethereum’s supply increasing and network demand shrinking, ETH’s price outlook remains bearish unless fundamental improvements boost market sentiment.
For real-time updates on Ethereum’s price movements and market trends, check out our crypto analysis section.
