The Decentralized Finance (DeFi) sector has experienced a sharp contraction since early October, as the total value locked (TVL) dropped over 21%.
Coupled with waning institutional interest, the 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. This marked 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.
DeFi TVL. Source: DeFiLlama
Major DeFi protocols 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.
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 the price dropping close to $3,000 in early November.
Nevertheless, the weakness runs deeper. The ETH-denominated TVL has been steadily declining since April. This occurred even as ETH prices were climbing. This divergence suggested that ETH’s rally was driven by sources other than DeFi growth.
Notably, two major factors drove ETH demand: digital asset treasury funds (DATs) and exchange-traded funds (ETFs). In 2025, major institutional players increased their exposure to ETH, while ETFs recorded strong inflows.
Yet, this accumulation has also 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.
ETH Holdings By ETFs and DATs. Source: Strategic ETH Reserve
Furthermore, BeInCrypto reported last week that, after six consecutive days of outflows, ETH ETFs saw $12.1 million in inflows on November 6. Nonetheless, this trend reversed the following day. SoSoValue data highlighted $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. Despite this, recent 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.
Ethereum Price Performance. Source: BeInCrypto Markets
Analyst Ted Pillows has pointed to $3,700 as a key 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.
The analyst noted that if Ethereum fails to break above this level, it could retrace toward the $3,400 support area.
