#cryptonews
While sentiment in the Ethereum (ETH) market remains in the dumps as the world’s second-largest crypto by market cap slides back under $2,600, the bears could be in for a surprise in the months ahead.
Short-term chart analysis suggests a deeper pullback in the days ahead could ensue. After breaking below its downtrend from the mid-December highs last week, Ethereum was rejected at a retest of this trend line on Tuesday.
If Wednesday’s US CPI data comes in hotter-than-expected, this could be the next major catalyst for downside as Fed rate cut bets are wound down. Since the hugely successful US Bitcoin ETF launch in 2024, ETH/BTC has slumped from around 0.055 to current levels around 0.027.
That suggests elevated risks of a deeper drop back towards $2,000 in the weeks ahead.
However, while short-term sell pressure could remain elevated, some analysts say that traders would do well to continue stacking ETH. Here’s why ETH’s streak of consistent underperformance could end soon.
And if the crypto market is set to face headwinds in the coming weeks, BTC dominance is only set to rise as traders shift towards the relative safety of the world’s largest and oldest crypto.
Meanwhile, analysts at Citi just published a bullish research note on the coin, noting how its poor price performance this year stands at odds with growing on-chain activity (including TVL), strong ETF inflows this year, and growing search interest.
Analysts at 10x Research posited on Monday that Ethereum might be approaching oversold levels and could present a good short-term risk-reward bet.
A recent increased in ETH whale purchases, noted by X analyst Ted Pillows, could reflect a view amongst “smart money” investors that, as noted by 10x Research, risk reward at the current ETH price is very good.
The arrival of the Trump administration in the White House has already kickstarted a new era for crypto in the USA, with bolstering the Ethereum ecosystem likely to be central to plans given the Trump family’s investments in the coin.
Citi also noted what could be one of Ethereum’s most important bullish narratives right now – that the Trump family (via their World Liberty Financial DeFi project) has been stacking ETH and now hold over $200 million.
Thanks to its technical flaws (like relatively high gas prices and slow transactions), fears remain elevated that ETH is going to get left behind – Uniswap, the biggest DEX operating on Ethereum, recently launched its own layer-1 protocol, an example of these concerns. That, plus an underwhelming Ethereum ETFs launch in 2024, have resulted in lackluster price action even as BTC surged to new record highs above $100,000.
Ethereum has been dogged by concerns about competition from up-and-coming rivals like Solana, Sui, and its layer-2 ecosystem of blockchains like Base and Arbitrum.
Unlike retail investors, major financial institutions like BlackRock prioritize security and decentralization over transaction speed and cost.
Outside of Bitcoin, Ethereum stands out as the most trusted smart contract-enabled blockchain for institutional use.
Per DeFi Llama, Ethereum’s TVL is currently around $56.4 billion, a 53% share of overall TVL in the space.