- Andrew
The Decentralized Finance (DeFi) market has entered a sharp downturn since early October, with over $36 billion in value wiped out and Ethereum once again under pressure. The total value locked (TVL) across DeFi protocols has fallen 21%, triggering questions about ETH’s resilience and investor demand heading into November.
DeFi Protocols Hit by Double-Digit Losses
According to DeFiLlama, total DeFi TVL peaked above $172 billion in early October — its highest level since late 2021. That surge has since evaporated, with TVL now sitting near $136 billion, reflecting widespread capital outflows across the ecosystem.
Top protocols like Aave, Lido, EigenLayer, and Ethena all posted TVL declines between 8% and 40%, underscoring a sector-wide contraction. Much of this downturn followed Ethereum’s price correction, as ETH/USD slid toward the $3,000 mark in early November.
However, the weakness extends beyond price action. Even as ETH rallied earlier this year, the ETH-denominated TVL in DeFi had been trending lower since April — a clear sign that capital inflows into DeFi were lagging broader market gains.
Institutional Slowdown and ETF Outflows
Two major forces — digital asset treasury funds (DATs) and exchange-traded funds (ETFs) — had supported ETH demand through 2025. Yet, both have cooled off recently. Data from the Strategic ETH Reserve shows combined DAT and ETF holdings dipped from 12.95 million ETH in October to 12.75 million in November, signaling reduced institutional accumulation.
After six straight days of ETF outflows, ETH briefly saw $12.1 million in inflows on November 6, according to BeInCrypto, before reversing sharply the next day with $46.6 million in outflows, per SoSoValue. This volatility reflects uncertainty among institutional investors, further pressuring Ethereum’s medium-term outlook.
Ethereum Price Outlook
Despite softer demand, ETH has shown signs of recovery amid broader market relief. As of writing, ETH trades at $3,609, up 6.6% in the past 24 hours.
Analyst Ted Pillows highlights $3,700 as a critical resistance zone:
“If Ethereum closes above $3,700 on the daily chart, a move toward $4,000 becomes likely. Failure to do so could trigger a pullback to around $3,400.”
The Bigger Picture
The recent $36 billion DeFi contraction underscores the sector’s sensitivity to liquidity and investor confidence. Ethereum remains at the center of DeFi’s evolution — but with weakening institutional flows and cautious sentiment, the coming weeks could determine whether ETH reclaims momentum or faces renewed downside.
