Wales' men will have to qualify for the top tier of European hockey next season after drawing 3-3 with Russia in their final EuroHockey Championships match.
Wales' 6-1 defeat by Spain on Thursday meant Danny Newcombe's side needed to better France's result against Spain.
However, France scored twice in the second half to beat Spain 3-2.
Wales led Russia 3-2 until the final minutes, and now lose their automatic place in EuroHockey's first division for the next Championships in 2023.
James Naughalty scored twice against Russia, either side of Hwyel Jones' goal.
Wales were playing in the third division as recently as 2015 but had climbed to the top tier of European hockey.
Earlier in the 2021 tournament, Newcombe saw his side recover from an 8-1 defeat by Germany to beat France 3-2 before losing 6-0 to Netherlands.
Wales finished seventh in the group, with Russia eighth.