3 Reasons Ethereum Price Risks 25% Downside in June

Ethereum, the second-largest cryptocurrency by market capitalization, has had a tumultuous year. While the approval of spot Ethereum ETFs initially sparked optimism, driving the price to nearly $4,000, the euphoria seems to have faded. Ether (ETH) has struggled to maintain its momentum, underperforming Bitcoin and the broader crypto market in recent weeks. Now, a confluence of factors is suggesting that the price could face significant downward pressure in June. Investors are understandably concerned: will ETH reverse its fortunes, or will a correction send prices tumbling? This article will delve into the three primary reasons why Ethereum's price risks a potential 25% downside in June, exploring technical indicators, on-chain data, and fundamental market forces that could contribute to this bearish outlook. Understanding these risks is crucial for investors looking to navigate the volatile crypto landscape and make informed decisions about their Ethereum holdings. We'll examine bearish technical patterns, decreasing DeFi Total Value Locked (TVL), and macroeconomic pressures from the Federal Reserve. By understanding these factors, you can better prepare for potential market shifts and manage your risk effectively.

Ethereum s native token Ether (ETH) has dropped more than half of its value in 2025 in dollar terms, while also losing value against Bitcoin (BTC) and now remains pinned below $2,000 for several reasons. What s more, ETH price could face even bigger losses in June due to another slew of factors, which will be discussed below. [ ]

1. Bearish Technical Signals: The Descending Triangle

One of the most concerning signs for Ethereum bulls is the emergence of a bearish technical pattern known as a descending triangle. This pattern, visible on ETH/USD daily price charts, typically signals a continuation of a downtrend.

3 reasons Ethereum price risks 25% downside in June J by admin 0 Comments Ethereum s native token Ether ( ETH ) has dropped more than half of its value in 2025 in dollar terms, while also losing value against Bitcoin ( BTC ), and now remains pinned below $2,000 for several reasons .

Here's how the descending triangle works:

After rallying to $3,972 after the approval of spot Ethereum exchange-traded funds (ETFs), Ether has underperformed over the last week, down 10%, compared to Bitcoin and the broader crypto

• Formation: The pattern is characterized by a series of lower highs that form a descending trendline, while the price also consolidates around a horizontal support level.
• Breakdown: When the price breaks below the horizontal support line, it often leads to a sharp decline.
• Target: The projected downside target is usually equal to the height of the triangle at its widest point, measured from the support line downward.

In Ethereum's case, if the price breaks below the lower trendline of the descending triangle, it risks falling toward $1,350 in June, a potential drop of approximately 25% from current levels. This represents a significant correction and could test the resolve of even the most ardent ETH supporters.

Why is this pattern significant?

Descending triangles are watched closely by technical analysts because they have a statistically significant track record of predicting price declines. The formation suggests increasing selling pressure at progressively lower price points, eventually overwhelming the support level.

However, it's important to remember that technical analysis is not foolproof. Market sentiment and unforeseen events can invalidate any pattern. Therefore, it's crucial to consider other factors alongside technical indicators.

2. Declining DeFi Activity and TVL

Ethereum's bullish prospects are closely tied to the health and growth of the Decentralized Finance (DeFi) sector. Ethereum's blockchain hosts a majority of DeFi applications, and its success is heavily reliant on the activity and capital flowing through these platforms.

However, recent data reveals a concerning trend: the Total Value Locked (TVL) in Ethereum-based DeFi protocols is declining. As of June 5th, the TVL stood at $68.71 billion, representing approximately 65% of the total DeFi TVL.

While this dominance is still significant, it reflects a substantial retreat from previous highs. Before the collapse of Terra Luna (LUNA) and its stablecoin UST on May 9, the TVL in Ethereum DeFi pools was hovering around $100 billion. This represents a loss of over 30% in TVL, indicating a significant outflow of capital from the Ethereum DeFi ecosystem.

Why is declining TVL a problem?

• Reduced Demand for ETH: Lower TVL translates to less demand for ETH, as users need ETH to interact with DeFi protocols.
• Decreased Transaction Fees: Less activity on the Ethereum network reduces transaction fees, which are a key driver of value for ETH holders.
• Negative Sentiment: Declining TVL can create negative sentiment around Ethereum, leading to further price declines.

Impact of the LUNA/UST Collapse

The LUNA/UST collapse had a devastating impact on the entire crypto market, and Ethereum was no exception. The event eroded trust in DeFi and highlighted the risks associated with algorithmic stablecoins. Many investors pulled their funds from DeFi protocols, contributing to the decline in TVL.

The lingering effects of this collapse continue to weigh on the Ethereum DeFi ecosystem, and it may take time for trust and confidence to fully recover.

Cautious Outlook on DeFi

According to Ilan Solot, a partner at Tagus Capital, a cautious outlook around the DeFi sector is contributing to the potential for further decline in Ether's price. This cautious outlook is driven by factors such as:

• Regulatory Uncertainty: The regulatory landscape for DeFi remains unclear, creating uncertainty and potentially deterring institutional investors.
• Security Risks: DeFi protocols are vulnerable to hacks and exploits, which can lead to significant losses for users.
• Complexity: DeFi can be complex and difficult to understand, making it inaccessible to many retail investors.

3. Macroeconomic Pressures and Hawkish Federal Reserve Policies

The broader macroeconomic environment plays a significant role in the performance of all asset classes, including cryptocurrencies. Currently, macroeconomic risks, particularly those stemming from the Federal Reserve's hawkish monetary policies, are adding to the downward pressure on Ethereum's price.

What are hawkish Federal Reserve policies?

Hawkish policies refer to the Federal Reserve's actions to combat inflation by raising interest rates and reducing its balance sheet. These policies are designed to slow down economic growth and cool down inflationary pressures.

How do these policies impact Ethereum?

Rising interest rates and a tighter monetary policy can negatively impact Ethereum in several ways:

• Reduced Risk Appetite: Higher interest rates make traditional assets, such as bonds, more attractive to investors. This can lead to a decrease in risk appetite and a shift away from riskier assets like cryptocurrencies.
• Increased Borrowing Costs: Higher interest rates increase the cost of borrowing, which can reduce investment and economic activity.
• Stronger US Dollar: Hawkish policies often lead to a stronger US dollar, which can negatively impact the price of assets priced in other currencies, including cryptocurrencies.

The Federal Reserve's commitment to fighting inflation through aggressive monetary policy is creating a challenging environment for Ethereum and the broader crypto market. As investors become more risk-averse and the cost of capital increases, the demand for cryptocurrencies may decline, putting downward pressure on prices.

Inflation and Crypto

While some argue that cryptocurrencies like Bitcoin and Ethereum can serve as a hedge against inflation, the reality is more complex. Cryptocurrencies are still relatively new and volatile assets, and their performance during periods of high inflation has been mixed. In some cases, they have acted as a hedge, while in others, they have declined in value alongside other risk assets.

The perception of cryptocurrencies as an inflation hedge is also influenced by broader market sentiment and macroeconomic conditions. When risk appetite is high, investors may be more willing to hold cryptocurrencies as a hedge against inflation. However, when risk appetite is low, investors may sell their cryptocurrency holdings to reduce their overall risk exposure.

Counterarguments: Potential Bullish Catalysts

Despite the bearish factors discussed above, it's important to acknowledge that there are also potential bullish catalysts that could support Ethereum's price in June and beyond.

Ethereum ETF Inflows

The approval of spot Ethereum ETFs was a significant milestone for the cryptocurrency industry, and the initial inflows into these ETFs were encouraging. Within the first nine days of trading (since May 16th), the ETFs attracted $435.6 million. This demonstrates institutional interest in Ethereum and could potentially drive further price appreciation.

However, it's important to note that ETF inflows can be volatile and are subject to change based on market sentiment and other factors. Continued inflows are crucial for Ethereum to maintain its bullish momentum.

Whale Accumulation

On-chain data reveals that some large Ethereum holders, often referred to as ""whales,"" have been accumulating ETH. For example, one entity purchased 2,004 ETH ($4.99 million) on June 1st, re-entering the market after losses in March. Another whale scooped up 3,957 ETH ($9.88 million) on the same day. This suggests that some institutional-grade investors believe that Ethereum is undervalued and has long-term potential.

Whale accumulation can be a bullish signal, but it's important to remember that whales can also sell their holdings, which can put downward pressure on prices. Therefore, it's crucial to monitor whale activity closely and consider it in conjunction with other factors.

Ethereum's Technological Advancements

Ethereum continues to evolve and improve its technology through upgrades and developments. The Ethereum 2.0 upgrade, which transitions the network to a proof-of-stake consensus mechanism, is expected to improve scalability, security, and energy efficiency. These advancements could attract more users and developers to the Ethereum ecosystem, driving long-term growth and value.

Navigating the Risks: Practical Advice for Investors

Given the potential for a 25% downside in Ethereum's price in June, it's crucial for investors to take steps to manage their risk and protect their capital.

1. Diversify Your Portfolio: Don't put all your eggs in one basket. Diversify your investments across different asset classes and cryptocurrencies to reduce your overall risk exposure.
2. Set Stop-Loss Orders: A stop-loss order is an instruction to automatically sell your assets if the price falls below a certain level. This can help limit your losses in the event of a market downturn.
3. Stay Informed: Keep up-to-date with the latest news and developments in the cryptocurrency market. Follow reputable news sources, analyze market data, and consult with financial advisors to make informed investment decisions.
4. Consider Dollar-Cost Averaging (DCA): DCA involves investing a fixed amount of money at regular intervals, regardless of the price. This can help reduce the impact of volatility and potentially improve your returns over the long term.
5. Reassess Your Risk Tolerance: The cryptocurrency market is inherently volatile. Make sure you understand your own risk tolerance and adjust your investment strategy accordingly. Don't invest more than you can afford to lose.

Conclusion: A Cautious Outlook for Ethereum in June

While Ethereum holds immense potential and boasts a vibrant ecosystem, the confluence of bearish technical signals, declining DeFi activity, and macroeconomic pressures paints a cautious picture for its price in June. The potential for a 25% downside should not be ignored, and investors should take proactive steps to manage their risk.

Key Takeaways:

• A descending triangle pattern suggests a potential price target of $1,350 if the lower trendline is broken.
• Declining TVL in Ethereum DeFi protocols indicates reduced demand for ETH and negative sentiment.
• Hawkish Federal Reserve policies are creating a challenging environment for risk assets like cryptocurrencies.
• Potential bullish catalysts include Ethereum ETF inflows and whale accumulation, but these are subject to change.
• Diversify your portfolio, set stop-loss orders, stay informed, and reassess your risk tolerance to navigate the risks effectively.

The cryptocurrency market is constantly evolving, and it's crucial to remain vigilant and adapt to changing conditions. While the short-term outlook for Ethereum may be uncertain, its long-term potential remains significant. By understanding the risks and opportunities, investors can make informed decisions and navigate the volatile crypto landscape successfully. Before making any investment decisions, consult with a qualified financial advisor.