Is Ethereum’s Bounce a Trap? ETF Outflows and Japan Risks Further ETH Price Dips

Ethereum’s native token, Ether (ETH), showed signs of recovery after dropping by more than 6% during the weekend.

As of Jan. 26, ETH/USD was up by over 3% during the Asian session, mirroring rebounds across the crypto market. The pair rose despite a growing macro risk-off sentiment, with US stock futures recording losses and gold reaching over $5,000 at the start of the week.

US Govt. Shutdown, Canada Tariffs Spook Risk Traders

Over the weekend, markets grew uneasy as renewed worries surfaced about a possible US government shutdown, with lawmakers still divided over funding and the risk of a lapse in federal operations.

In the forex market, attention also turned to Japan, where traders noted the possibilities of the New York Fed preparing to support Japanese officials in a direct yen-defence intervention.

The US dollar logged its steepest weekly drop since May, creating dip-buying opportunities in the Ether market and leading to a modest recovery.

ETH ETFs See Over $611 Million in Weekly Outflows

US-listed spot Ethereum ETFs saw about $611.17 million in net outflows over the past week, a sign that institutional demand for Ether has weakened in the near term.

That pullback matters because ETF flows can act as a steady source of spot buying when sentiment improves. Instead, the outflows suggest large investors were reducing ETH exposure, not adding it.

At the same time, traders have been rotating into other large-cap themes—most notably Solana—further thinning Ether’s bid.

The result is a rebound that looks more like short-term dip-buying than the start of a stronger, institution-led uptrend.

Rising JGB Yields Tighten Global Liquidity Backdrop for Ether

Japan’s 10-year government bond yields have been climbing toward multi-decade highs as investors demand a higher risk premium amid fresh fiscal-spending concerns and Japan’s debt load, which sits above 230% of GDP.

In my view, higher JGB yields can pull capital back toward Japan and reduce the amount of cheap funding circulating through global markets, conditions that typically pressure risk assets.

The macro drag intensified after the Bank of Japan struck a more hawkish tone in its latest outlook, reinforcing expectations that Japan’s rate regime may continue shifting higher.

In practice, firmer yields can also strengthen the yen, increasing the risk of a “yen carry-trade unwind,” an episode that has previously coincided with broader de-risking across crypto, including Ethereum.

Ethereum Technical Analysis: ETH Risks 17-18% Drop Next

ETH/USD appears to have broken down from an ascending triangle, slipping below the rising support trendline after repeatedly failing near the flat resistance band around the low-$3,300s.

The move also leaves ETH trading under its key moving averages (20-day near $3,049 and 50-day near $3,104), reinforcing bearish momentum. RSI has cooled to sub-40, suggesting sellers remain in control.

If the breakdown holds, the pattern’s measured move points toward the $2,380 area as the next downside target.