Ethereum has significantly declined, falling below the critical support level of $3,000 to approximately $2,500.
This drop marks one of the sharpest sell-offs the cryptocurrency has faced in recent years, according to Coinglass data. This downturn follows U.S. President Trump’s decision to impose a 25% tariff on imports from Canada, Mexico, and China, contributing to broader market instability and increasing uncertainty.
Cryptocurrencies, including ETH, have declined in value along with traditional financial markets. Panic selling by large Ethereum holders (whales) has intensified this decline, leading to significant liquidations.
Crypto trader MaxBecauseBTC, shared in a post on X, described the event as the largest Ethereum liquidation in over two years, with the most negative funding. He drew comparisons to the March 2020 COVID crash, adding that “those who stick around will be rewarded.”
Largest liquidation event on $ETH in the past 2+ years with the most negative funding… most comparable event to this was March 2020 Covid Crash.
I believe those that stick around will be rewarded. Most will not stick around. Defining moment for many. We all go through it. pic.twitter.com/hmZRGuGJAo
— Max (@MaxBecauseBTC) February 3, 2025
$2.1bn liquidated in 24 hours.
Good chance this is a near term capitulation. Don’t know about the long term trend, but for now, this was a lot of forced selling and priced may be dislocated.
— Felix Hartmann (@FelixOHartmann) February 3, 2025
Andrew Kang, a partner at Mechanism Capital, suggested that ETH might be oversold and could rebound to $2,700, supporting the notion of a market recovery.
Ethereum has faced challenges in gaining the anticipated bullish momentum, lagging behind Bitcoin despite several network upgrades. Research from Matrixport indicates that these upgrades are more beneficial in the long term than offering immediate price boosts. Factors such as fluctuating demand for Ethereum ETFs and the rise of meme coins on cheaper networks have further impacted ETH’s market position. Nevertheless, Ethereum’s recent increase in ether issuance has strenghtened confidence in its security, surpassing TRON’s metrics, despite TRON enjoying lower transaction fees. In December 2024, Ethereum’s options market remained stable, but its spot price exhibited lower volatility compared to short-term implied volatility, suggesting an expectation of potential short-term price fluctuations and overall uncertainty in ETH’s near-term outlook.
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