The past few days have been tumultuous for Ethereum. A brutal sell-off saw the price of Ethereum (ETH) plummet to $2,150 on February 3, 2025, marking its lowest point since September of the previous year. The sharp drop was in reaction to new U.S. tariffs that were imposed on the 1st of February, specifically a 25% tariff on imports from Canada and Mexico, and a 10% tariff on Chinese goods. This development led to a wave of uncertainty that rippled across global markets, including the crypto world.
However, within hours of the tariff announcement, diplomatic efforts were initiated to mitigate the situation. Canadian Prime Minister Justin Trudeau announced that he had spoken with President Trump and secured a temporary 30-day pause on the tariffs. Mexico followed suit, with President Claudia Sheinbaum confirming that tariffs would be put on hold for a month as well.
Following these developments, Ethereum’s price began to recover. As of February 4, it has rebounded to $2,700, and even touched $2,900 briefly after the announcement of the tariff halt. This recovery was further buoyed by the World Liberty Financial (WLFI), a DeFi project associated with Donald Trump, Donald Trump Jr., and Eric Trump, moving a whopping $307.41 million in eight assets to Coinbase Prime for treasury management.
Despite the recovery, Ethereum still faces a steep uphill climb. It remains down 15% over the past week and is nearly 45% below its all-time high of $4,890, recorded in November 2021. This begs the question – what’s really happening in Ethereum’s ecosystem, and how could it impact Ethereum’s price prediction in the days ahead?
Ethereum has been implementing critical changes to improve scalability and transaction efficiency. On February 3, validators approved an increase in Ethereum’s gas limit for the first time since 2021. This development allows for a greater number of transactions and operations to fit within a block, improving overall throughput and reducing congestion.
However, Ethereum still faces stiff competition from other blockchain ecosystems like Solana, Avalanche (AVAX), and emerging players like Sei (SEI), all of which are capable of handling large transaction volumes without requiring external scaling solutions.
Can Ethereum hold its ground? A lot depends on the upcoming Pectra upgrade set to go live in early 2025, which is expected to enhance the network’s scalability, particularly for layer-2 solutions. This upgrade, coupled with the recent gas limit increase, could provide a boost to Ethereum’s ecosystem growth.
However, there are still many uncertainties to consider. Ethereum’s recent price drop was not just a reaction to broader economic uncertainty but also served as a market reset, clearing out excessive leverage that had built up in Ethereum’s open interest. With those positions flushed out, Ethereum’s price recovery to $2,700 was driven by spot demand rather than excessive leverage, signaling a healthier foundation for future price movement.
The question of whether Ethereum can reverse its downtrend is a complicated one, dependent on a mix of factors such as scalability upgrades, adoption, competition, and economic conditions. However, if Ethereum can successfully navigate these challenges, it could potentially see a rise in the coming years.
Long-term forecasts for Ethereum are optimistic, with DigitalCoinPrice estimating an average price of $14,829 in 2030, while Changelly predicts an average of $40,055 and a potential peak of $47,066. However, these long-term predictions come with their own set of risks. Ethereum faces stiff competition from other blockchain networks, all of which are vying to offer lower fees and higher speeds.
In conclusion, while ETH prediction models remain optimistic, it’s essential to combine technical forecasts with real-world adoption trends before making any long-term commitments. Trade wisely, and remember, never invest more than you can afford to lose.
