Ethereum (ETH), the second largest cryptocurrency by market capitalization, recently experienced a significant price correction, dropping below $3,100 for the first time in 29 days. This marks a notable change from its peak performance in December, when it hit this year’s high of $4,106 on December 16. However, ETH’s all-time high, set at $4,877 on November 8, 2021, remains unchanged. Since reaching this peak, Ethereum has been making lower highs and lower lows, indicating bearish momentum in the market.

Ethereum market sentiment and support levels

2024 was a tumultuous year for Ethereum, with a mix of growth catalysts and market downturns. At the beginning of the year, Ethereum was up 47%, although it lagged Bitcoin’s significant gains. A key factor in the optimism was the SEC’s approval of spot Ethereum ETFs in May, which not only attracted institutional investors but also contributed to a 24.7% return this month. However, geopolitical tensions and broader market dynamics, including the Bitcoin halving, led to volatile periods, and in April, the value of ETH fell by 17.2%.

Despite these fluctuations, Ethereum has maintained its stronghold in the decentralized finance (DeFi) space, with total value locked approaching $80 billion, highlighting its fundamental strength. However, the second quarter was less favorable, with ETH recording a quarterly return of -5.08% due to external factors such as the Middle East crisis.

Ethereum was trading around $3,648 in December 2024, showing signs of recovery in the last month of the year and outperforming other major cryptocurrencies such as Bitcoin and Solana. However, the recent drop below $3,100 has sparked discussion about the possibility of further declines or a quick return to modern highs.

Market sentiment, as indicated by the Fear and Greed Index of 57 (greed), suggests that retail investors view the current decline as a buying opportunity rather than a reason to panic. This sentiment is key as Ethereum moves through support levels, with the immediate $2,900 level being the focal point. If Bitcoin experiences a significant decline to around $90,000, this could further impact the ETH price, potentially pushing it towards the next significant support at $2,900.

Can Ethereum hit a modern all-time high before 2025?

When looking at the possibility of reaching a modern all-time record before 2025, several factors are taken into account:

• Institutional adoption: Continued investment by institutional players, especially through ETFs, may lead to increased demand.
• Network improvements: Ethereum’s upcoming updates and scalability improvements could boost investor confidence.
• Market sentiment: The overall sentiment in the cryptocurrency market, which is influenced by broader economic conditions, technological advances and regulatory news, will be key.

The concentration of stakes in Ethereum also plays a role. The Beacon Chain escrow agreement covers over 38 million ETH, which is crucial for Ethereum’s transition to Proof-of-Stake. Other significant holders include exchanges such as Binance and Coinbase, which can influence market liquidity and price movements through strategic asset management.

In summary, while Ethereum’s decline below $3,100 signals a moment of caution, fundamental fundamentals and market dynamics suggest there is still a path to modern highs before 2025. However, this would require positive developments in both the cryptocurrency-specific and broader economic landscape. Investors should closely watch how Ethereum interacts with support levels and responds to upcoming market catalysts.

Featured image created with DALL-E, chart from Tradingview.com