The Decentralized Finance (DeFi) sector has experienced a sharp contraction since early October, with the total value locked (TVL) dropping by over 21%. Coupled with waning institutional interest, this decline has raised concerns about Ethereum’s (ETH) demand and its price trajectory in November.
### DeFi Protocols Register Double-Digit TVL Losses
Data from DeFiLlama showed that the total DeFi TVL reached over $172 billion in early October, marking its highest level since late 2021. However, this multi-year peak was short-lived. The latest figures indicate that TVL has since fallen to around $136.26 billion in November, erasing more than $36 billion in value.
Major DeFi protocols have endured significant losses over the past month. Aave, Lido, EigenLayer, and Ethena reported TVL declines ranging from 8% to 40%, highlighting the sector’s widespread slowdown.
### Ethereum’s Price Correction and DeFi Impact
One of the key drivers behind this dip is Ethereum’s price correction. Following October’s market crash, ETH has continued to face challenges, with its price dropping close to $3,000 in early November.
Nevertheless, the weakness extends deeper than just price. The ETH-denominated TVL has been steadily declining since April, even as ETH prices were climbing. This divergence suggests that ETH’s rally was driven by factors other than DeFi growth.
### Institutional Demand Slows Down
Notably, two major factors have driven ETH demand: digital asset treasury funds (DATs) and exchange-traded funds (ETFs). In 2025, major institutional players increased their exposure to ETH, and ETFs recorded strong inflows. Yet, this accumulation has recently slowed.
According to figures from the Strategic ETH Reserve, combined DAT and ETF holdings have fallen from 12.95 million ETH in October to 12.75 million ETH in November.
Furthermore, BeInCrypto reported last week that ETH ETFs saw $12.1 million in inflows on November 6, following six consecutive days of outflows. However, this trend quickly reversed the following day, with SoSoValue data highlighting $46.6 million in outflows on November 7.
Weakening demand across both retail and institutional fronts could likely leave Ethereum vulnerable to further downside pressure.
### Possible Recovery and Key Levels to Watch
Despite the recent downturn, macroeconomic catalysts have led to a modest recovery for ETH. At the time of writing, ETH was trading at $3,609, representing a 6.6% increase over the past day.
Analyst Ted Pillows has pointed to $3,700 as a key resistance level for Ethereum. “ETH is approaching a key resistance level now. If Ethereum closes a daily candle above the $3,700 level, it could rally towards the $4,000 level,” Pillows posted.
However, the analyst also noted that if Ethereum fails to break above this level, it could retrace toward the $3,400 support area.
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This evolving situation will be critical to follow as Ethereum’s price movements continue to influence the broader DeFi ecosystem and institutional interest.
https://bitcoinethereumnews.com/ethereum/defi-tvl-sinks-21-what-this-means-for-ethereums-price/
