Ethereum’s price action has taken a bearish turn, sparking concerns among investors and traders. The cryptocurrency’s value dropped to $2,600 on Thursday, representing a decline of over 35% from its December peak. This slump aligns with weakened demand from investors, as evidenced by spot Ethereum exchange-traded funds experiencing net outflows of $40.95 million on Wednesday. Despite cumulative inflows of $3.1 billion, the recent outflows highlight diminishing investor interest.

Adding to the negative sentiment, Ethereum whales have been offloading significant amounts of tokens. A notable example involves a large holder who deposited 20,000 ETH, worth approximately $52.8 million, to Kraken. This same whale sold an equivalent amount earlier in January and retains a balance of $134 million in Ethereum. Historically, whale selling has often acted as a bearish indicator for cryptocurrencies, as these experienced investors are perceived as market trendsetters.

Ethereum’s challenges extend beyond price declines and whale activity. The network has been losing market share in key areas, such as fee generation. Data from TokenTerminal reveals Ethereum has earned $179 million in fees this year, but it has been overtaken by other blockchain networks, including Solana, Tron, and Tether. This shift raises concerns about Ethereum’s ability to maintain its dominance in the blockchain ecosystem.

The technical outlook for Ethereum also paints a grim picture. The formation of a "death cross" on the daily chart—where the 50-day and 200-day exponential moving averages cross—has signaled bearish momentum. Historically, this pattern has preceded sharp declines; for instance, Ethereum dropped over 20% after forming a death cross in August last year.

Compounding the bearish narrative, Ethereum has invalidated a potential inverse head-and-shoulders pattern after breaking below the $2,821 level, which would have served as the right shoulder. Additionally, the cryptocurrency has formed a double-top pattern at $4,100, with a neckline at $2,140. These technical patterns suggest the possibility of further declines, with an initial target near $2,140. If Ethereum breaches this level, it could face further losses, potentially dropping to $1,530, the November low.

On the upside, Ethereum would need to climb above the 200-day moving average at $3,090 to invalidate the bearish setup. Such a move could pave the way for renewed bullish momentum, though current indicators suggest this scenario remains unlikely in the near term.