Ethereum (ETH) has faced a rough start to 2025, with its market capitalization plummeting by 36% in just seven weeks. From a peak of $360 billion on December 22, 2024, it has dropped to $230 billion by February 8, 2025, wiping out significant investor profits. This decline has shaken confidence in ETH, especially as it lags behind other major cryptocurrencies.
Why Are Investors Pulling Back?
A key factor driving this downturn is negative sentiment, which has led many retail investors to sell off their ETH holdings. According to Santiment’s analysis, the increased fear, uncertainty, and doubt (FUD) surrounding Ethereum have created an environment of heightened selling pressure. As a result, daily trading volume has decreased by 20%, with only 15.2 million ETH traded on February 8, down from the monthly average of 19 million.
📉 Ethereum's market cap has dropped -36% since its local high just 7 weeks ago. The result has been a stark drop in the amount of ETH tokens in profit since their date first mined. On the daily close, we are seeing the lowest percentage in profit in over 4 months, and lowest… pic.twitter.com/ze8uVeWqfA
— Santiment (@santimentfeed) February 8, 2025
Additionally, Ethereum’s network activity has slowed. Active addresses and transaction volumes are down by 12% and 18%, respectively, indicating lower demand and participation. This decline in network engagement further adds to the bearish sentiment surrounding the asset.
Technical Indicators Signal Volatility Ahead
Technical indicators show that Ethereum is still navigating choppy waters. The Relative Strength Index (RSI) for ETH/USD sits at 32, signaling an oversold market that could rebound soon. However, the Moving Average Convergence Divergence (MACD) continues to show a bearish crossover, reinforcing the ongoing downtrend.
Increased volatility is also evident, as seen with widening Bollinger Bands. Ethereum’s price recently dipped to $2,140 before bouncing back to $2,620, but it remains 37% below its high in December 2024. The price swings suggest that ETH’s journey is far from stable.
A Potential Reversal on the Horizon?
Despite the gloomy outlook, some analysts see signs of a potential reversal. Crypto expert Maxpain points to Ethereum’s Network Realized Profit/Loss (NPL) metric, which suggests that the market may have hit a capitulation point. Historically, this phase has been followed by strong recoveries. Moreover, whale transactions exceeding $100,000 have been on the rise since late January, hinting at large investors quietly accumulating ETH in anticipation of a future rally.
Also Read: Ethereum Gas Prices Drop to Record Low of 1 Gwei Amid Declining Network Activity in 2025
As Ethereum grapples with its current challenges, only time will tell whether it can break free from its bearish trend and reclaim its upward momentum.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
