The cryptocurrency market has been in a whirlwind, and Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, hasn’t been spared. It has been a rollercoaster week for ETH, with the digital asset plunging to a significant low of $2,065 amid escalating geopolitical trade war tensions. However, it showed resilience, bouncing back as investors took advantage of the dip to accumulate more, pushing its price to $2,780 by Feb. 4.
Ethereum began the week trading between $3,200-$3,400, but a crypto-wide selloff triggered by U.S. trade tariffs saw it crash to a low of $2,065 on February 3. This price plunge was short-lived as institutional investors started accumulating, resulting in a sharp rebound to $2,780. Additionally, record Ethereum exchange-traded fund (ETF) volumes, totaling $1.5 billion, gave it a much-needed boost. Despite this recovery, ETH is still trading 10% lower than its January close, manifesting the lingering macroeconomic uncertainties.
Data from blockchain analytics firms, Intotheblock and Santiment, revealed an interesting trend. On February 3, the same day ETH prices plummeted, there was a massive $1 billion outflow from exchanges. This was the largest single-day outflow since January 2024, a clear indication of institutional accumulation. In terms of price movement, ETH faces immediate resistance at $2,850, and for a bullish reversal to be confirmed, it must break out above $3,303. Support levels are pegged at $2,350–$2,400, which aligns with a long-term trendline dating back to 2022.
However, Ethereum isn’t out of the woods yet. A sustained drop below $2,300 could put a damper on the bullish outlook. Nevertheless, technical indicators like the falling wedge pattern suggest potential upward movement towards $3,500. Still, the market sentiment is majorly mixed. On one hand, exchange outflows and ETF activity imply optimism, but on the other hand, the escalating trade war and regulatory uncertainties could lead to prolonged volatility.
Derivatives markets also reflect this bearish sentiment with negative funding rates for major altcoins. But there is light at the end of the tunnel. The Pectra upgrade scheduled for March and potential approvals for Ethereum ETFs could rekindle bullish momentum. Additionally, ETH’s correlation with Bitcoin’s post-halving cycle and historical February gains (averaging 17%) give traders hope for a possible rebound.
The tumultuous week for Ethereum underscores its vulnerability to macro risks and institutional dynamics. While short-term challenges persist, long-term fundamentals such as network upgrades, ETF prospects, and DeFi adoption continue to anchor optimism. Traders now wait with bated breath for clarity on the U.S.-China tariff effect and technical breakouts to guide Ethereum’s next move.
