Ethereum’s Fragile $3.2K Floor: Key Insights and DeFi Trends

The cryptocurrency landscape is always evolving, and Ethereum (ETH) has consistently remained at the heart of the action. However, recent market activity suggests that Ethereum’s $3.2K support level is teetering. Despite record stablecoin inflows, bearish structures and declining DeFi Total Value Locked (TVL) keep traders cautious. Could this be a turning point for Ethereum? Let’s break down the latest trends and what they mean for the market.

Ethereum Faces Back-to-Back Lower Lows

In early November, Ethereum struggled to flip critical price floors into support. Over the span of just a few days, the coin experienced significant dips: a 7.78% drop followed by an 8.8% decline, breaking through $3.8K and $3.5K levels. This downward trajectory resulted in two consecutive lower lows, a classic indicator of bearish sentiment.

Adding to this fragile outlook, the market saw a $2 billion liquidation cascade on November 3rd and 4th, leaving Ethereum trading near $3.05K. While this wasn’t as severe as October’s $20 billion wipeout, the sentiment damage was undeniable. Historically, Ethereum’s volatility in the aftermath of previous crashes indicates that the $3.2K floor may not hold without significant buying pressure.

DeFi TVL Declines Amid Record Stablecoin Supply

On the decentralized finance (DeFi) side, Ethereum isn’t faring much better. The ecosystem has witnessed a slide in Total Value Locked (TVL) by approximately $20 billion in the past month, signaling a retreat of liquidity. While Ethereum’s stablecoin supply reached an all-time high, the additional capital isn’t yet translating into bullish movement.

This caution is also reflected in derivatives markets. Open Interest for Ethereum futures is down only $5 billion versus the $15 billion reduction observed in October. While this suggests lighter liquidation pressure, it also highlights a lack of significant new bids coming into the market.

HODLers Realize Losses as FOMO Stalls

The Ethereum network is still working its way through realized losses. Net profit/loss (P/L) indicators reveal that more traders are exiting positions at a loss. On November 4th, Ethereum recorded realized P/L losses of -$626 million, marking the lowest level in eight months. This bearish sentiment shows that FOMO (