The Decentralized Finance (DeFi) sector has suffered a sharp $36 billion contraction since early October. The total value locked (TVL) plummeted from a high of $172 billion to $136.26 billion. This steep drop, coupled with weakening institutional demand for Ethereum, raises serious doubts about ETH’s price trajectory for the rest of November.
Major DeFi protocols have taken the hit. Leading platforms like Aave, Lido, EigenLayer, and Ethena reported TVL declines ranging from 8% to 40% over the past month. This widespread slowdown highlights a broad loss of confidence. While ETH’s price correction, which dropped close to $3,000 in early November, is a contributing factor, the weakness appears to be deeper and more structural.
Analysis of the ETH-denominated TVL reveals a worrying trend. This metric has been steadily declining since last April. Importantly, this drop occurred even during periods when ETH prices were climbing. This clear divergence suggests that Ethereum’s previous rally was not driven by organic growth and adoption within the DeFi ecosystem.
Can ETH break the key $3,700 resistance without institutional support?
Historically, two main factors drove recent ETH demand: digital asset treasury funds (DATs) and exchange-traded funds (ETFs). Major institutional players increased their exposure to ETH during 2025. However, this institutional demand for Ethereum is also slowing down sharply. According to figures from the Strategic ETH Reserve, combined ETF and DAT holdings fell from 12.95 million ETH in October to 12.75 million in November.
ETF flows are particularly volatile. After six consecutive days of outflows, ETH ETFs saw a brief inflow of $12.1 million on November 6. Nonetheless, this positive trend reversed the following day. SoSoValue data highlighted heavy outflows of $46.6 million on November 7. This weakening on both the retail and institutional fronts could leave Ethereum vulnerable to further downside pressure.
Despite this landscape, ETH managed a modest recent recovery, driven by macroeconomic catalysts. At the time of writing, ETH was trading at $3,609, a 6.6% increase over the last day. Analyst Ted Pillows has pointed to $3,700 as the key resistance level. Pillows posted that if Ethereum closes a daily candle above $3,700, it “could rally towards the $4,000 level.” However, he warned that if ETH fails to break that barrier, it could retrace toward the $3,400 support area.
