- Ethereum dropped 6% in 24 hours, driven by bearish market sentiment and declining transaction volumes.
- Despite this, traders like Bluntz Capital and Ted Pillows remain optimistic, predicting a rebound to $3,700 and even $4,000 by the end of January, fueled by upcoming network upgrades and Ethereum’s growing role in stablecoin usage.
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, suffered a steep 6% drop in just 24 hours, sparking concerns about its near-term trajectory. This decline comes despite fundamentally bullish developments, including key network upgrades and increasing use cases for Ethereum’s ecosystem. With analysts split on its outlook, the question remains: is Ethereum preparing for a rebound or further declines?
Bearish Sentiment Grips the Market
Ethereum’s price plunge coincided with Bitcoin’s downturn in early Monday trading, underscoring the broader bearish sentiment in the crypto market. Glassnode data revealed subdued demand for long positions, with hourly funding rates for ETH dropping significantly. Additionally, IntoTheBlock data showed a staggering 34.3% decline in Ethereum’s large transaction volume, alongside a 23% drop in daily active addresses.
Further compounding the bearish sentiment, the Ethereum Foundation sold another 100 ETH, worth $308,000, bringing its total sales since January 2, 2024, to 4,766 ETH ($13.6 million). Long liquidations soared to $90.8 million, marking their highest level since January 20, 2025.
Traders Eye Rebound Potential
While the current market appears grim, prominent crypto traders remain cautiously optimistic. Bluntz Capital, a well-known trader, took a long position on Ethereum, citing an “easy invalidation setup” and negative funding rates as potential signals for a rebound. He predicts a short-term recovery to at least $3,700, at which point he will reassess his position.
Similarly, Ted Pillows is bullish on Ethereum, projecting a rally to $4,000 by the end of January. He attributes this optimism to several factors, including Ethereum’s dominance in USD stablecoin usage, key network updates, and its classification as a commodity—a status unmatched by other smart contract platforms.
Network Upgrades Bolster Long-Term Outlook
Over the weekend, Ethereum’s founders revealed plans to enhance Layer-2 networks with “based rollups” and “native rollups.” These upgrades aim to improve scalability, reduce fragmentation, and reshape economic flows between Ethereum’s layers, potentially positioning the network for sustained growth.
Michaël van de Poppe, another prominent analyst, expressed frustration with Ethereum’s recent lackluster performance but emphasized its long-term potential. He highlighted the possibility of lower yields under a Trump presidency and a weaker U.S. dollar (DXY) as catalysts favoring Ethereum over Bitcoin in the future.
What’s Next for Ethereum?
As Ethereum wrestles with declining activity metrics and bearish market conditions, its long-term fundamentals remain strong. The introduction of innovative rollup solutions and Ethereum’s growing role in stablecoin usage could pave the way for significant gains. While the short-term outlook is uncertain, analysts like Bluntz Capital and Ted Pillows suggest Ethereum’s rebound may be imminent.
For now, traders are keeping a close eye on key levels like $3,700 and $4,000 as potential turning points. Whether Ethereum will stage an “epic rally” or continue its descent remains to be seen. One thing is clear: Ethereum’s evolution is far from over.
