Ether's price is trading at $3,137 as of 3:00 am EST, down 7% over the last 24 hours. ETH was trading 22% below its value seven days ago.

A number of on-chain and technical indicators show Ethereum could drop even lower as the hopes of a spot Ether ETF continue to dwindle.

Let's look at factors supporting Ethereum's downside.

High supply supply on exchanges

One of on-chain metrics used to determine the amount of selling pressure a digital asset is facing is supply on exchanges. This is a metric that measures the amount of a cryptocurrency or token held in known exchange wallets.

The number of assets held on exchanges increases when more people want to sell than buy.

Data from market intelligence firm Glassnode shows that the ETH balance on exchanges has been increasing since the beginning of March. The chart below shows that Ether's supply on exchanges has increased from 13.14 million ETH on March 4 ETH to $13.59 million on March 19, validating holders' intent to sell, which adds to the selling pressure.

Ethereum supply on exchanges. Source: Glassnode

Ethereum's downside is also supported by the decreasing total value locked (TVL) in the network's smart contracts. Data from DefiLlama shows that the TVL on Ethereum decreased by 20% from $57.95 billion on March 13 to $46.28 billion on March 19. 

Ethereum's TVL. Source: DefiLlama

A decreasing TVL indicates that the platform is being used less and less. Therefore, decreasing TVL for the Ethereum network means less developers are interacting with the blockchain and hence, decreasing demand for ETH.

ETH faces stiff resistance on the upside around the $3,500 level

Data from IntoTheBlock's In/Out of the Money Around Price (IOMAP) model shows that at the current price, ETH is facing stiff resistance on its upside. The area around $3,500 is where the resistance can be felt most. This was within the $3,452 to $3,548 price range where about 935,720 ETH were previously bought by 1.74 million addresses.

Ethereum IOMAP Chart. Source: IntoTheBlock

Any attempts to push the price above this level would be met by immense selling from this cohort of investors who may want to breakeven. As such, selling pressure from this level would continue pulling ETH lower from the current price.

Historical similarities in Ether's downturns

A closer look at Ethereum's weekly chart shows that the price is displaying similar patterns to the one seen during the 2021 bull run. The RSI was at 84 on March 4 before the price started turning down. This is around the same level when the RSI was at 87 in May 2021 when the price turned down, tumbling 61% to $1,695.

If history repeats itself, ETH could drop from the current levels to $1,695. Such a move would represent a 46% decline from the current level.

ETH/USD daily chart. Source: TradingView

On the other hand, the weekly RSI is still in the positive region at 62. This means that the token is still bullish on longer timeframes. As such, ETH could turn up from the current level to return first toward $3,500 and later to $3,800. Later, the layer 1 token could rise back above $4,000 before making a run for the all-time highs.