Despite optimistic projections for Q1, Ethereum (ETH) continues to struggle, with recent trading data from Binance revealing a dip to $1,993 – the lowest price since April 2023. Although the asset has since recovered, rising above the $2,000 mark, it remains firmly in bear market territory.
The dip in ETH coincided with a general market downturn, with the asset sliding further to 0.025 BTC, and thus delaying a potential breakout against the leading coin. After falling under $2,000, ETH managed a recovery to $2,138,65, but this bounce does not necessarily signal a shift in market sentiment, as the crypto market continues to be dominated by fear.
This latest price dip has sparked numerous theories regarding the cause, with the main argument pointing to a general negative sentiment towards altcoins. Additionally, the crypto market appears to be mirroring the stock markets, with both experiencing downturns in response to the new trading tariffs implemented as part of President Trump’s financial strategy.
The current ETH price action coincides with an open interest of $9.8B, a significant decrease from the peak of over $16B seen in December. This reduced interest is largely due to traders viewing the asset as a long-term loss, alongside a general decrease in altcoin market values. Consequently, the Ethereum chain is experiencing reduced usage, sparking doubts about its future utility.
ETH’s decline has been mirrored in the Altcoin Season Index, which fell to its lower range of 22 points. Despite a slight recovery to 24 points, many previously profitable assets have experienced deep drawdowns, leading to increased trader caution.
The past year has seen ETH’s long-term vision come under scrutiny, with its continued inflation and the Ethereum Foundation’s failure to develop scaling tools undermining its value. The token’s primary utility, carrying Tether (USDT) and facilitating Uniswap’s main activity, has also been overshadowed by the migration of traffic and liquidity to L2 chains.
One theory suggests that ETH is being deliberately sabotaged by spot sellers aiming to liquidate remaining long positions. Despite the price drop, over 74% of ETH positions remain long. Liquidity has continued to build, even dropping to as low as $1,900.
However, ETH’s rapid recovery, which squeezed out short positions above $2,000, suggests it remains an attractive prospect in the $2,000 price range. Significant whale buying activity continues, although unexpected crashes have left even smart money in a precarious position.
Smaller whales are also buying the dip, with purchases of up to $10M. While ETH’s stability might be questionable, it continues to be accumulated by whales, who can afford to wait for a potential breakout.
One theory suggests that Trump’s World Liberty Fi may have influenced the market. In February, the fund shifted most of its ETH out of its wallets, potentially in preparation for a sale. The ETH dip also provides an opportunity for whales to cover loans.
Furthermore, ETH has experienced selling pressure from the Bybit hacker, who managed to trade nearly 500K ETH within a matter of days. Despite these challenges, the continued interest from whales suggests that ETH still has the potential for recovery.
