As a researcher tracking Ethereum, I’ve noticed the price seems to be hitting a wall around $2,140. This is happening at the same time as a significant decline in the DeFi sector since January, and it aligns with a concerning pattern I’ve been observing in the price charts for the last seven weeks – a pattern that suggests a potential downturn.
Bitcoin’s recent underperformance and a decrease in long-term holders indicate the price drop could be more significant than a typical temporary dip. Both the price chart and blockchain data support this idea, pointing to the same conclusion from different perspectives.
Ethereum Price Mirrors DeFi TVL Collapse Since January Peak
Over the past two months, from late March to mid-May, Ethereum’s price chart has formed a bearish inverted cup pattern. The recent price increase appears to be a small recovery within that larger pattern, resembling the ‘handle’ of the cup.
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As a crypto investor, I’m watching for a specific pattern that often signals a potential price drop. It looks like a rounded top, where the price initially rises, then starts to curve downwards. Sometimes, you’ll see a small bounce – a brief recovery – right before the final drop. If the price falls below a key support level – what traders call the ‘neckline’ – it’s usually a strong indication that the price will continue to fall. It’s a bearish signal, meaning I’d likely consider selling or shorting if I see this play out.
The price decline reflects the weakening state of DeFi on the Ethereum network. The total value of assets in Ethereum DeFi protocols has decreased significantly, falling from $106.687 billion on January 15th to $62.957 billion by May 18th – a drop of almost 41% in just four months.
The recent losses are happening within the same area that previously signaled a downward trend. In late March, the total value of digital assets on the network (DeFi TVL) was around $80.32 billion. Since then, it’s dropped by about $17 billion, following the same downward curve seen in the price chart. This decline in underlying value might explain why Bitcoin has risen slightly (2%) this month, while Ethereum has fallen (8%), creating a 10% performance gap between the two leading cryptocurrencies.
The recent small increase in price might not last. It’s unclear if this is a real recovery or just a temporary blip, and depends on whether network usage becomes more consistent and if other investors show similar hesitancy.
Mid-Term Holders Cut Stake as DeFi Stress Spreads
Data from Glassnode confirms the recent downturn. Their HODL Waves indicator, which measures how long Ethereum has been held by different groups of owners, shows a significant decrease in the amount of Ethereum held for between 3 and 6 months.
On April 7th, this group of ETH holders controlled 18.63% of all ETH in circulation while a specific chart pattern was still developing. By May 18th, their share had dropped to 12.73%, a decrease of about six percentage points in just six weeks.
The decrease in ETH held by mid-term holders (those holding for 3-6 months) is significant because these investors are generally more reliable than short-term traders. Their choice to sell their ETH or simply not replenish their holdings indicates they may be losing confidence, likely due to the ongoing decline in activity within the DeFi space.
Ethereum’s decentralized finance (DeFi) value and the number of long-term ETH holders are both decreasing, suggesting a potential further price drop. While the price chart currently doesn’t show a clear trend, it will likely determine the next significant move.
Ethereum Price Levels That Decide the 19% Risk
Ethereum needs to rise above $2,132 quickly to continue its recent recovery. If it can break past $2,210, that would be the first indication that the price is starting to climb again, based on a technical analysis using Fibonacci levels between a low of $1,799 and a high of $2,464.
This pattern will likely continue unless Ethereum (ETH) rises above $2,307. If it breaks past $2,464 – the previous high point – the pattern will no longer be valid.
If the price falls below $2,132, it could drop to $2,087, which is a key support level. A daily close below $2,087 would signal a confirmed downward trend.
If the price drops as expected, the next key level to watch is $1,690. This price represents a potential 19% decline from a recent high and reflects the total risk associated with the price pattern observed.
It’s important to note that the ‘inverted cup and handle’ pattern is only confirmed when the price clearly falls below its neckline. Until then, a price increase within the handle is still possible. Currently, the $2,087 level is a key price point – a break below it suggests a potential drop to $1,690, while staying above it could lead to a rise towards $2,210.
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2026-05-19 12:46