Ethereum Lags Bitcoin as DeFi TVL Drops 41% Since January

Ethereum ($ETH) is struggling near $2,140, with its price stalling as the network’s DeFi sector continues to lose value. Since January, the total value locked in Ethereum DeFi has fallen sharply, from a peak of $106.687 billion to $62.957 billion as of May 18. That’s a drop of nearly 41% in just four months, and it mirrors a bearish chart pattern that has been forming over the last seven weeks.

The daily chart shows an inverted cup pattern, which took shape between March 29 and May 18. The current rebound looks like it might be the handle of this inverted cup. This is generally considered a bearish formation, where prices peak in the middle of a rounded top, then see a brief recovery before falling further. The risk is that this pattern signals a continuation lower if the cup’s neckline breaks.

DeFi Collapse Coincides with Price Struggles

The price structure seems to be tracking the network’s DeFi erosion closely. Around late March, just before the inverted cup started forming, Ethereum DeFi TVL was near $80.32 billion. Since then, it has lost about $17 billion, which aligns with the cup’s descent on the price chart. This fundamental weakness might be why Bitcoin is up 2% month-on-month while ETH is down 8%. That lag between the two top cryptocurrencies is about 10%.

The handle that is forming now shows a brief bounce. Whether this recovery continues depends on whether the underlying network activity can stabilize, or if other holder groups confirm the same cautious mood.

Mid-Term Holders Are Reducing Their Stakes

On-chain data from Glassnode adds to the picture. The HODL Waves indicator, which tracks how much Ethereum supply is held in different age groups, shows that the 3-month to 6-month cohort has dropped significantly. This group held 18.63% of total ETH supply on April 7, when the inverted cup was still forming its right side. By May 18, that share had fallen to just 12.73%—a drop of about six percentage points in six weeks.

This matters because the 3-to-6 month bucket captures mid-term holders, who are often more stable than short-term speculators. Their decision to either spend ETH or let it age out without rebuilding this bucket hints at a possible loss of conviction. This could be tied to the same DeFi erosion that’s playing out across the network.

With both DeFi TVL and this steady holder cohort sliding together, the case for a deeper move has been building quietly underneath an ETH price chart that still looks indecisive. The chart has become the deciding factor.

Key Price Levels to Watch

Ethereum price needs to clear $2,132 immediately to keep the handle’s bounce alive. A break above $2,210, which is the 0.382 Fibonacci level drawn from the $1,799 swing low to the $2,464 swing high, would be the first sign of returning strength. The pattern only starts to weaken if ETH reclaims $2,307. It is fully invalidated above $2,464, the prior peak that defines the cup’s rim.

On the downside, a failure at $2,132 exposes $2,087, which is the neckline of the formation. A daily close below $2,087 would confirm a breakdown. The measured-move target then sits at $1,690. This level is roughly 19% below the neckline and carries the full risk built up by the cup’s depth.

The nuance here is that inverted cup and handle setups only confirm on a clean break below the neckline. Until that happens, the handle bounce remains in play. So the $2,087 floor separates a potential recovery toward $2,210 from a measured slide toward $1,690.

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