Ethereum has been struggling, with its market capitalization plunging 36% in just seven weeks. It dropped from $360 billion on December 22, 2024, to $230 billion by February 8, 2025, wiping out a significant portion of investor profits. Confidence in ETH has taken a hit, especially as it lags behind other major cryptocurrencies.
Market trends, technical indicators, and on-chain data reveal a complex picture—one that may provide clues about ETH's next move.
Why Are Investors Retreating?
Santiment's analysis shows that negative sentiment has increased selling pressure, with many retail traders dumping ETH due to fear, uncertainty, and doubt (FUD). As a result, daily trading volume fell by 20%, with only 15.2 million ETH traded on February 8 compared to the monthly average of 19 million.
Ethereum's network activity has also declined, with active addresses and transactions dropping by 12% and 18%, respectively. This signals reduced network demand and engagement, further fueling a pessimistic outlook.
Technical Indicators Point to Higher Volatility
Ethereum’s technical indicators also suggest further uncertainty. The ETH/USD Relative Strength Index (RSI) stands at 32, indicating an oversold market that could see a rebound. However, the Moving Average Convergence Divergence (MACD) shows a bearish crossover, confirming the ongoing downtrend.
Meanwhile, the widening Bollinger Bands suggest higher volatility, meaning ETH's price may continue fluctuating. The cryptocurrency recently dipped to $2,140 before rebounding to $2,620—still 37% below its December peak.
👉 Stay updated on Ethereum’s recovery prospects
Is a Reversal Coming?
Despite bearish signals, some analysts believe Ethereum may be poised for a turnaround. Crypto analyst Maxpain points out that Ethereum’s Network Realized Profit/Loss (NPL) metric suggests capitulation—historically, this phase is followed by a strong recovery.
Additionally, whale transactions exceeding $100,000 have been increasing since late January. This could indicate that large investors are quietly accumulating ETH, positioning themselves for future gains. If this trend continues, Ethereum might be gearing up for a comeback.
FAQs
Why did Ethereum’s price drop so sharply?
The decline was driven by negative market sentiment, reduced trading volume, and lower network activity, compounded by broader crypto market trends.
Is Ethereum oversold right now?
Yes, with an RSI of 32, ETH is currently in oversold territory, which could signal a potential rebound.
What are the key indicators to watch for an ETH recovery?
Monitor whale activity, NPL metrics, and trading volume spikes for signs of accumulation and renewed investor confidence.