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Ethereum is significantly lagging behind Bitcoin in terms of returns in this cycle. This is not what most Ethereum supporters had hoped for, as during the last bull market, there was widespread speculation about the so-called “Flippening” – the possibility that Ethereum could surpass Bitcoin.
By now, this dream seems to be drifting further away for investors in Vitalik Buterin’s project.
Ethereum No Longer the Ultimate Money?
The plan to overtake Bitcoin appeared to gain momentum with the introduction of EIP-1559 and the transition to Proof-of-Stake (PoS).
With EIP-1559, half of all Ethereum transaction fees were permanently destroyed. These ETH were burned and thus removed from circulation forever.
At the same time, the shift to Proof-of-Stake resulted in a significantly lower issuance of new Ethereum coins. The rewards for validators, who secure the blockchain, became much lower compared to what miners earned previously.
As a result, Ethereum was expected to become “Ultra Sound Money” – a reference to Bitcoin being considered “Sound Money.”
The term “Sound Money” originates from the time when gold was used as currency. When a gold coin is dropped, it makes a sound – gold is hard money.
Bitcoin is also seen as “hard money” because, like gold, it has absolute scarcity. A few years ago, Ethereum was branded as “Ultra Sound Money” since EIP-1559 and Proof-of-Stake were supposed to ensure that the supply of ETH would continuously decrease.
The total supply of ETH was not just expected to remain stable but to shrink over time. However, this vision now seems to have completely failed.
The End for Ethereum?
The pseudonymous analyst Checkmate does not mince words:
“It’s done,” he writes alongside the following chart.
It is done. https://t.co/09iKkblZQ4 pic.twitter.com/VwhoGaeMws
— _Checkmate 🟠🔑⚡☢️🛢️ (@_Checkmatey_) February 5, 2025
The chart shows the growth of Ethereum’s supply. For a long time, due to EIP-1559 and Proof-of-Stake, this supply was shrinking. However, Ethereum’s blockchain activity has significantly declined, meaning that far fewer ETH are being burned.
So few, in fact, that Ethereum’s total supply is now increasing again. The expected deflation, which once excited the community, has failed to materialize. Instead, Ethereum is experiencing inflation once more.
Ethereum Price Analysis & Trading Tips
Ethereum has recently experienced a significant price decline, breaking key support levels and entering a consolidation phase around $2,700. This analysis will assess the current market structure and provide trading tips for both short-term and long-term traders.
Technical Overview
- Current Price: $2,760.56
- Resistance Levels: $3,100, $3,300, $3,500
- Support Levels: $2,500, $2,700
- Trend: Bearish with signs of stabilization
- Volume Activity: Increased selling pressure, followed by attempts at recovery
The recent price drop below $3,000 and $2,900 signals a strong bearish sentiment. However, Ethereum is currently holding above $2,700, which may act as a key support level for a potential rebound.
Trading Insights
- Bearish Momentum Continues:
ETH has broken multiple support zones, indicating that sellers remain in control. The recent drop suggests further downside risk if buyers fail to regain momentum. - Crucial Support at $2,700:
Ethereum is testing the $2,700 support level. A break below this area could accelerate losses toward $2,500. - Key Resistance at $3,100:
For any potential recovery, ETH must reclaim $3,100 as a support level. Until then, price action remains vulnerable to further declines. - Potential Rebound Signs:
If ETH forms higher lows and shows stronger buying volume, a short-term bullish reversal could occur. Watch for confirmation signals before entering long positions. - Short-Term Strategy:
Scalping near $2,700 could be an option for active traders, but tight stop-losses are necessary due to increased volatility. - Long-Term Positioning:
If ETH reclaims $3,100-$3,300, it may trigger a larger uptrend, making it a better entry point for long-term investors.
Ethereum is currently at a critical price zone. Bulls need to reclaim $2,900-$3,100 to regain strength, while a break below $2,700 could lead to further downside. Traders should manage risk carefully, using stop-losses and monitoring volume trends to confirm potential reversals.
📊 Recommendation: Stay cautious and wait for clear market signals before entering large positions.
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