Ethereum’s (ETH) price is struggling to maintain upward momentum, forming a bear flag on the daily chart—a pattern often signaling further downside. Coupled with declining transaction fees and slumping network activity, Ethereum could be on the verge of another sharp drop, potentially targeting $1,230.
Ethereum’s Network Activity Declines
ETH’s price has faced significant pressure since the start of 2024. After hitting a yearly high of $3,432 on Jan. 31, ETH plummeted nearly 50% to a 16-month low of $1,750 on March 11. While a modest 18% rebound followed, ETH has failed to decisively reclaim the $2,000 level, a critical resistance zone.
On-chain data reflects this weakness. Ethereum’s daily transaction count has fallen to levels last seen before Donald Trump’s presidential election victory in October 2024. Additionally, the network’s average transaction fee has plunged to an all-time low of 0.00025 ETH ($0.46) as of March 24, according to CryptoQuant.
This decline in transaction fees suggests reduced demand for Ethereum’s block space, affecting decentralized finance (DeFi), NFTs, and other applications. Historically, ETH’s price has been strongly correlated with network activity, with higher fees indicating increased demand, as seen during the 2021 DeFi boom.
ETH Supply Inflation Weighs on Price
Another key factor pressuring ETH’s value is its shift back to an inflationary supply trend. With declining network fees, the daily ETH burn rate has dropped to historic lows, contributing to a rising supply growth rate of 0.76% per year. Data from Ultrasound.money shows that Ethereum’s total supply has now surpassed pre-Merge levels, reversing the deflationary trend initiated by its transition to proof-of-stake in September 2022.
Bear Flag Suggests Ethereum Could Drop to $1,230
Technical indicators add to the bearish outlook. ETH/USD has formed a bear flag pattern on the daily chart, a signal of continued downside. A breakdown below the $2,000 level could trigger a significant decline, with a measured target near $1,230—implying a potential 40% drop from current levels.
Despite this bearish setup, some analysts remain optimistic. Crypto analyst Jelle suggests that if ETH reclaims $2,200, it could invalidate the bear flag, leading to a strong recovery. Fellow analyst Crypto Ceaser also believes Ethereum is “heavily undervalued” at current levels.
$ETH is bouncing, and trying to get back above the key support level.
— Jelle (@CryptoJelleNL) March 24, 2025
Work to do – but if this pushes back above $2200 – we'll have a monster deviation on our hands.
🤞🏼 pic.twitter.com/eZLHnnIxcI
As ETH navigates this critical juncture, traders are closely watching whether it breaks below support or stages an unexpected rebound.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Also Read: Ethereum Price Struggles: Analysts Warn of 50% Drop as Whales Cash Out
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
