Ethereum (ETH) has been on a downward trajectory for nearly six weeks, dipping below the $4,000 mark on December 16, 2024. Since then, it has declined over 20%, currently trading at approximately $3,260. To reverse this trend and approach its previous highs, Ethereum needs to bolster fundamental blockchain activity. Aurelie Barthere, principal research analyst at Nansen, noted, “Other layer-1s are catching up with Ethereum regarding apps, use cases, fees and amount staked.” She emphasized the importance of increased collaboration with both private and public sector entities, especially in the U.S., given recent regulatory momentum favoring blockchain and crypto. Barthere also highlighted the potential impact of the Elon Musk-led Department of Government Efficiency (DOGE), which has reportedly explored blockchain-based solutions for expense tracking and financial management. Additionally, Joseph Lubin, co-founder of Ethereum and founder of Consensys, suggested that the Trump family might be considering building an Ethereum-based cryptocurrency business, which could further drive adoption. In the options market, Ether trading volume has surged to its highest levels in over a month, indicating a potential recovery from the recent sell-off. Analysts have observed a growing number of bullish Ether options contracts, suggesting traders are betting on a price rebound. However, for ETH to continue its uptrend, it needs a daily close above $3,400, which would pave the way for a rally towards $4,000. Overcoming the significant resistance at $3,400 could trigger over $1.09 billion worth of cumulative leveraged short liquidations. Some industry observers anticipate an Ether resurgence in February, driven by continued institutional buying from Trump’s World Liberty Financial protocol. In summary, for Ethereum to reclaim its previous all-time high, it must enhance blockchain activity, foster new use cases, and strengthen collaborations across various sectors to regain investor confidence.
