#CryptoMarketDrops150KLiquidated

Ethereum Price Drops 10% Compared to Bitcoin as DeFi Machines Lose $43 Billion

Ethereum price
ETHUSD
is currently holding around $2,140 due to the sharp decline in DeFi since January, now aligning with the bearish chart pattern formed over the past seven weeks.

ETH's movement lagging behind Bitcoin and the decreasing number of holders indicate that this price weakness might not be just a normal correction. The structure on the daily chart and on-chain data tell the same story from different perspectives.

Ethereum Price Reflects DeFi TVL Decline Since January Peak

Ethereum has formed an inverted cup pattern on the daily chart between March 29 and May 18. The current rebound resembles a handle forming from that inverted cup.

This pattern is a bearish setup where the price peaks in the middle of a rounded top and then forms a short recovery handle. This pattern indicates a continuation of the decline if the neckline of the inverted cup is broken.

This price structure follows the decline in DeFi position on the Ethereum network. Ethereum's DeFi TVL has fallen from $106.687 billion on January 15 to $62.957 billion as of May 18, a drop of nearly 41% in four months.

This damage occurred during the same period as the bearish pattern. Around late March, just before the inverted cup started forming, the DeFi TVL on this network was about $80.32 billion. Since then, it has decreased by approximately $17 billion, following the cup shape on the price chart. This fundamental erosion could explain why Bitcoin has risen 2% monthly while ETH has fallen 8%. This is the reason for the 10% lag between these top two cryptocurrencies.

The currently forming handle indicates a short-term rebound. Whether this rebound can continue or not will heavily depend on the stability of network activity or whether there is confirmation of cautious sentiment from other holder groups.

Mid-term Holders Reduce Holdings Due to Widening DeFi Pressure

On-chain data from Glassnode further confirms this weakness. The HODL Waves indicator, which monitors the proportion of Ethereum supply based on holding age, shows the 3-6 month holder group declining sharply.

This group held 18.63% of the total ETH supply on April 7 when the inverted cup pattern was still forming its right side. By May 18, its share dropped to 12.73%, a decrease of about six percentage points over six weeks.

This decline is significant because the 3-6 month bucket represents mid-term holders, who are usually more stable than short-term speculators. Their decision to spend ETH or let their assets age without replenishing that bucket signals a possible loss of confidence, related to the ongoing erosion of DeFi on the network.

As Ethereum's DeFi TVL and the number of holders decline together, the potential for further downward movement increases, even though the ETH price chart still appears uncertain. Now, the chart becomes the main determinant of the next move.

Ethereum Price Levels That Signal Risk 19%

Ethereum's price must break above $2,132 immediately to keep the handle rebound intact. A breakout above $2,210, the 0.382 Fibonacci level from the swing low of $1,799 to the swing high of $2,464, will mark the first sign of regained strength.

This pattern only begins to weaken if ETH manages to break below $2,307. Full validation occurs above $2,464, the previous peak that serves as the upper boundary of the cup.

If it fails to hold at $2,132, then support is at $2,087, which is the neckline of the pattern. A daily close below $2,087 will confirm a breakdown.

The target movement from the pattern measurement is around $1,690. This level is about 19% below the neckline and reflects the full risk of the depth of the cup.

The pattern to watch is the inverted cup and handle setup, which will only be confirmed if the price clearly breaks the neckline. Until then, the rebound on the handle part can still continue. The $2,087 level acts as the boundary between potential recovery toward $2,210 or a measured decline to $1,690.