The Ethereum network has faced significant competition from other L1 chains seeking to dominate the DeFi ecosystem.
Ether price could drop below $3K again before kickstarting the next major altseason.
Less than 48 hours to the close of the first month of 2025, it is more evident that short-term sellers are in control of Ethereum price action. The large-cap altcoin, with a fully diluted valuation of about $384 billion and a 24-hour average trading volume of about $24 billion, has been trapped in a falling wedge pattern since mid-December 2024.
With Bitcoin dominance approaching 60% for the first time in 2025, the ETH/BTC pair has continued to shed in the macro time frame. After retesting a crucial support level above $3,040 in the past few days, which coincided with the 50-weekly Moving Average (MA), Ether’s price is now signaling a potential bullish breakout toward a new all-time high shortly.
Ethereum Price Faces Short-Term Selloff
According to crypto analyst Ali Martinez, Ether’s MVRV recently dropped below the 160-day MA, thus increasing a potential 40% drop below the $3K support level. A similar short-term bearish sentiment has been highlighted by crypto analyst Benjamin Cowen, who that Ether price will continue to drop fueled by the ongoing Quantitative Tightening (QE).
As a result, Ether price is likely to drop towards the support range between $2,230 and $2,610, where nearly 12 million traders purchased over 62 million ETH.
The short-term bearish sentiment for Ether will, however, be invalidated if the altcoin consistently closes above the key resistance level of around $4K in the near term. Furthermore, Ether price has been forming a potential reversal pattern characterized by a triple top coupled with a bearish divergence of the weekly Relative Strength Index (RSI).
Ether Whales Feel the Pressures
The Ethereum network is the largest Web3 ecosystem, with a total value locked of about $64 billion and a stablecoins market cap of around $117 billion. However, the growing dominance of other layer one chains – led by Solana (SOL), Ripple Labs’XRPL, Toncoin (TON), and Tron (TRX), among others – has threatened to dethrone the Ether network.
Consequently, Ethereum whales have accelerated the rate of profit distribution to other blockchains. Moreover, the Donald Trump administration has vowed to help the entire cryptocurrency grow exponentially in the near future.
According to on-chain data analysis provided by , long-term Ether investors have started to feel anxiety after being extremely bullish in the last three months. Furthermore, the US spot Ether ETFs are about to turn negative for the first time after registering four consecutive weeks of cash inflows.
Since the beginning of this week, the US spot Ether ETFs have registered a net cash outflow of about $346 million.
