After the rise to $3,972 following the authorization of spot Ethereum exchange-traded funds (ETFs), Ether has shown a decline of 10% over the past week, lagging behind Bitcoin and the wider cryptocurrency market. This downturn has sparked doubts among traders about the end of the altcoin's downward trajectory. In contrast, during the same period, Bitcoin's price fell by 6%, while the total cryptocurrency market capitalization experienced a 5.3% drop. Several market indicators and technical signals suggest that ETH could undergo a more profound correction before attempting a recovery.

The ETH/BTC ratio has trended downwards in the previous week, with Ether's value dropping by 10% in the last seven days, performing weaker than Bitcoin and other prominent layer 1 tokens. Moreover, BTC's price fell by 5.5% over the week, causing the ETH/BTC ratio to decrease by 5.21% from 0.055 on June 3 to 0.0513 on June 11, marking its lowest level since May 20.

ETH's underperformance can be attributed to various factors, including specific events related to Bitcoin in 2024. The success of U.S. spot Bitcoin ETFs, with nearly $2 billion in capital inflows last week, has impacted the crypto market. Additionally, the market correction observed in recent months due to factors such as the upcoming CPI reading and FOMC meeting decisions on rate cuts has affected all crypto prices, including Ether's.

Ethereum's network activity has also recorded a decline in specific metrics over the past three months. Data from Glassnode indicates a drop in daily active addresses on the Ethereum network from 622,963 on March 20 to 458,400 on June 10, representing a 1.2% decrease in the last 48 hours alone.

Although Ethereum maintains its prominence in the layer 1 sector, Solana has gained market share in terms of on-chain activity. Ethereum's NFT volume decreased by 9% over the last seven days to 105 million, as illustrated by data from DappRaddar. Further insights show that Ethereum trails behind Solana and the BNB Chain in total unique active wallets (UAWs), with over 524,000 interactions with the protocol, a 4.5% decline in the past week, contrasting with the 2.7 million UAWs on Solana, which surged by 74% in the same timeframe.

The decreasing on-chain activity implies reduced demand for Ether within the ecosystem, which exerts downward pressure on its price. Ether is facing strong resistance levels on the upside, having recently lost a critical support level around the $3,500 demand zone, turning it into a resistance barrier. This zone has historically posed challenges for ETH bulls, with previous breaches resulting in significant downtrends.

The current market setup indicates a likelihood of further descent in Ether's price, following a 12% drop from the recent high of $3,973 on May 27 to the current level of $3,511. A bearish candlestick pattern on the daily chart suggests the continuation of the downtrend. Ether bulls are hopeful for support at the psychological level of $3,400, but a close below this level could signal a decline to $2,840, representing an 18% fall from the current price.

It is important to note that this article does not offer investment advice, and readers should conduct their research before making any investment decisions.