Ethereum rebounded strongly, can it usher in a real explosion in 2025?

Title: "Ethereum's rebound looks strong, but can it hold? The 2025 outlook"

Author: Ankish Jain

Compiled by: Bai Hua Blockchain

A violent sell-off has washed out the weak ETH positions in the market, followed by a significant rebound. With the advancement of new tariffs, whale movements, and network upgrades, is Ethereum gearing up for a bull market in 2025?

1. Diplomatic negotiations trigger ETH rebound

Ethereum (ETH) price movements In the past few days, the Ethereum price has experienced violent fluctuations, falling to $2,150 on February 3, the lowest level since September 2024. This decline was mainly influenced by the market's reaction to the new US tariff policy, which officially took effect on February 1.

Tariffs shock the market and create uncertainty The US government imposed a 25% tariff on imports from Canada and Mexico, and a 10% tariff on Chinese goods, a move that quickly sparked global market unease, and the crypto market was not spared.

Diplomatic intervention stabilizes market sentiment However, within just a few hours, diplomatic efforts quickly unfolded. Canadian Prime Minister Justin Trudeau announced on X (formerly Twitter) that he had spoken with Donald Trump and successfully negotiated a 30-day tariff deferral, allowing the two countries to discuss a broader border security agreement during this period. This news provided the market with a chance to catch its breath, and the Ethereum price also stabilized and rebounded.

Mexico also adopted a similar response strategy, with President Claudia Sheinbaum confirming that the tariffs would be deferred for one month as part of the border security discussions.

Improved market sentiment, ETH price rebounds

Driven by these diplomatic developments, market sentiment has improved. As of February 4, the ETH price has rebounded to $2,700.

ETH briefly touched $2,900, the Trump family speaks out

After Trump announced the suspension of tariffs on Canada and Mexico, the ETH price briefly touched $2,900. Almost simultaneously, Eric Trump posted on X, saying: "In my view, now is a good time to increase your $ETH holdings."

This statement further boosted the positive sentiment in the market.

The Trump family's large-scale transfers of DeFi-related projects attract market attention

Eric Trump's statement came at a time when World Liberty Financial (WLFI), a DeFi project closely associated with Donald Trump, Donald Trump Jr., and Eric Trump, was undergoing a large-scale capital movement.

Data shows that WLFI has transferred $3.0741 million worth of eight assets to Coinbase Prime for financial management. This move has attracted market attention and may further impact the market sentiment of digital assets like Ethereum.

https://x.com/spotonchain/status/1886572108324725075?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1886572108324725075%7Ctwgr%5Ef39d77470064a7d15d206e3daa158fa4b431af84%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcrypto.news%2Fethereum-price-prediction-2025-2030-outlook%2F

2. WLFI unlocks Lido staked ETH and makes a large ETH purchase

Soon after, World Liberty Financial (WLFI) unlocked 19,423 Lido staked Ether (stETH) and converted them back to ETH. Immediately afterwards, the project used $5 million USDC to purchase 1,826 ETH at a price of $2,738.

Currently, WLFI still holds $96.62 million worth of various assets in nine known wallets, indicating that the project is actively managing its crypto asset allocation.

Concurrently, the traditional financial giant Fidelity Investments also made a notable move - on February 4, the institution purchased $49.75 million worth of ETH.

This series of capital flows shows that Ethereum not only rebounded strongly after the market turmoil, but also attracted firm buying from institutional investors, further bolstering market confidence.

Despite the institutional investment and price rebound, Ethereum has still declined 15% over the past week and is still about 45% below its all-time high of $4,890 (November 2021).

So, what has happened in the Ethereum ecosystem, and how will these changes affect the future price trend of ETH? Let's dive deeper.

3. Updates in the Ethereum ecosystem

Ethereum is undergoing critical adjustments to improve scalability and optimize transaction efficiency.

Gas limit increase and scalability improvements

On February 3, Ethereum validators successfully passed a proposal to increase the Gas limit, which is the first adjustment after the Merge and marks another step forward in network scaling.

Adjustment details:

The Gas limit has been increased from 30 million to 31 million, and may be further increased to 36 million in the future.

Unlike previous changes that required hard forks, this adjustment is automatically effective once supported by over 50% of validators.

The importance of the Gas mechanism: Gas represents the computational capacity required to execute transactions and smart contracts, and each operation consumes Gas fees. The Gas limit determines the total computational capacity that can be included in a single block.

When the transaction volume exceeds the limit, users either have to wait for subsequent blocks or pay higher fees to prioritize their transactions.

Increasing the Gas limit means each block can accommodate more transactions, improving network throughput and alleviating congestion.

Impact and challenges:

This helps complex DeFi applications, NFT platforms, and on-chain services run more smoothly.

However, the Gas limit adjustment does not solve the core issues of transaction cost and speed. Ethereum currently processes 1-1.5 million transactions per day, while Solana processes 60-65 million, far more efficiently and at lower cost.

This means Ethereum's long-term scalability challenge remains, and L2 solutions and protocol upgrades are still crucial.

As the Gas limit is increased and other upgrades are on the way, can Ethereum narrow the gap with its competitors and lay the foundation for the 2025 market outlook? The future network development is still worth close attention.

4. Ethereum's market position and competitive challenges

To address scalability and competitive pressure, Ethereum plans to launch the Pectra upgrade in early 2025, which is expected to significantly enhance the scalability of L2 solutions.

1) Key Pectra improvements: Increase in Blob targets

The Pectra upgrade will increase the Blob targets from 3 to 6.

Blobs (large data packets) are a mechanism used by L2 solutions to temporarily store transaction data, avoiding direct writing to the Ethereum mainnet.

Increasing Blob capacity can increase the throughput of L2 networks, enabling faster transactions at lower cost.

2) Continuous expansion of the Layer-2 ecosystem

Currently, Arbitrum, Optimism, and zkSync have become important pillars for Ethereum's expansion:

Arbitrum is the L2 solution with the highest TVL, significantly reducing costs by batch-packing Ethereum transactions and generating compressed proofs.

Optimism uses a similar approach, but also introduces an incentive mechanism, using the OP Token to incentivize developers to build applications on its network, enhancing ecosystem vitality.

With the advancement of Pectra's upgrade, the L2 ecosystem of Ethereum will see more efficient transaction processing capabilities, further enhancing its advantages in the scalability competition. However, facing the competition from high-efficiency and low-cost public chains like Solana, Ethereum's market position still needs to be solidified by continuously optimizing the L2 ecosystem and reducing user costs.

After these upgrades are implemented, whether Ethereum can dominate the 2025 bull market remains to be further observed.

3) zkSync: Zero-Knowledge Rollup Provides More Advanced Scaling Solutions

zkSync adopts Zero-Knowledge Rollup (zk-Rollup), providing more advanced scaling solutions, capable of achieving near-instant transactions while reducing fees.

Although L2 solutions have played an important role in alleviating Ethereum's congestion issues, they have also highlighted the core differences between Ethereum and its competitors.

4) Ethereum vs. Competing Blockchains: Fundamental Differences in Scaling Approaches

Ethereum relies on Layer-2 solutions to enhance scalability, while blockchains like Solana, Avalanche, and Sei natively support high throughput without the need for additional scaling layers.

Solana: No need for L2, can process tens of thousands of transactions per second at extremely low cost.

Avalanche: Utilizes a subnet mechanism to improve scalability and supports customized blockchain deployments.

Sei: An emerging high-performance chain focused on decentralized trading (DeFi) scenarios, with extremely fast transaction speeds.

In comparison, Ethereum still faces scalability challenges and relies on L2 scaling, while the underlying architectures of competing blockchains already possess the capability to efficiently process a large number of transactions, posing greater competitive pressure on Ethereum's scalability.

5) ETH/BTC Trend Under Pressure, Ethereum's Market Position Challenged

In addition to technical competition, Ethereum's market performance has also been affected.

As of February 4th, the ETH/BTC trading pair has dropped to 0.027, reaching the lowest level since March 2021.

This ratio has declined by nearly 50% compared to a year ago, indicating that ETH is relatively weaker compared to BTC, and market capital may be more inclined towards Bitcoin or other competing blockchains.

Facing both technical upgrades and market position challenges, Ethereum's future competitiveness not only depends on the development of the L2 ecosystem, but also requires continuous optimization in reducing transaction costs and improving mainnet performance; otherwise, it may further lose its advantages in the 2025 market competition.

6) Bitcoin Dominates Market Liquidity, Putting Pressure on Ethereum's Valuation

As Bitcoin continues to rise in terms of market liquidity and investor attention, Ethereum's relative valuation remains under close market observation.

7) Can Ethereum Stabilize?

ETH Drops to $2,150: Market Deleveraging, Clearing Excessive Speculation Ethereum fell to $2,150 on February 3rd, not only affected by macroeconomic uncertainties, but also as an adjustment from the market deleveraging, clearing the excessively accumulated high-leverage long positions.

Analyst @EmperorBTC pointed out that "there were a large number of low-quality ETH leveraged long positions in the market, which were forcibly liquidated when the price reached the $2,100 area."

Data shows that Ethereum's open interest has decreased by $4 billion in a short period of time, which has helped the market stabilize to some extent.

Related tweet: https://x.com/EmperorBTC/status/1886484757627744742

Post-Deleveraging, Spot Demand Drives ETH Rebound

After the leverage clearance, Ethereum rebounded from $2,150 to $2,700, and the rebound was primarily driven by spot demand rather than leverage, indicating a healthier market foundation.

The support from spot buying suggests that market sentiment has recovered, laying a more solid foundation for the future price trend of ETH.

5. Technical Analysis: Ethereum Tests Key Support Levels

ETH briefly fell below the 200-week moving average (200 WMA), which has been an important support area for a long time.

Another trader pointed out that ETH has reached the 0.618 Fibonacci retracement level, which is often a critical support for market cycle bottoms.

"ETH may have given the best 'gift' for 2025, breaking below the 200 WMA and testing the 0.618 Fibonacci retracement in the early morning."

This technical pattern suggests that ETH may have entered a cyclical bottom area, and if market demand continues to recover, the price may rebound further.

However, ETH still needs to prove its competitiveness against BTC, while relying on the Pectra upgrade and the advancement of the L2 ecosystem to enhance its market position.

1) ETH Price Rebounds to 200 WMA, but Macroeconomic Risks Remain

Although the ETH price has regained the 200-week moving average (200 WMA), historical data shows that Ethereum has seen strong rebounds after testing this support in August and September 2024.

However, the macroeconomic environment remains uncertain:

The trigger for the market crash - the escalation of US tariffs - has already caused volatility in global financial markets.

While diplomatic negotiations have temporarily eased market pressure, potential retaliatory measures or further economic restrictions may still pose risks to market sentiment.

If global liquidity tightens or market risk appetite declines, the recovery momentum of Ethereum may face challenges.

2) ETH/BTC Trend: Is Market Capital More Inclined Towards Bitcoin?

The continuous decline in the ETH/BTC ratio indicates that market capital is more favored towards Bitcoin, especially with the inflow of institutional investors being more biased towards BTC.

Ethereum's Pectra upgrade and Gas limit improvements may drive ecosystem growth, but whether these improvements can truly benefit users and developers remains to be seen, which will determine the long-term demand for ETH.

6. Ethereum Price Forecast: Will the Downtrend Reverse?

This market adjustment has cleared tens of billions of dollars in leveraged positions, putting ETH in a healthier market environment, but its future price trend is still influenced by multiple factors: scalability upgrades (Pectra, L2 development), market adoption (DeFi, NFT ecosystem growth), competitive landscape (challenges from Solana, Avalanche, etc.), and macroeconomic environment (interest rates, liquidity changes).

1) 2025 Ethereum Price Forecast

DigitalCoinPrice forecasts: ETH average price $5,510, peak $6,037 🔹 Changelly is more optimistic: ETH average $6,124, peak $7,194

DeAgentAI co-founder Joe believes that Ethereum's current price trend is consistent with historical patterns, and short-term bearish signals (such as the February 3rd breach of the 200 WMA) often require more detailed interpretation.

He pointed out that the historical trends in 2023 and 2024 show that ETH may see violent reversals around key support levels, so traders should pay attention to ETH's reaction to these critical supports as an important signal for future trends.

Can Ethereum See a 2025 Bull Market?

ETH is currently in a corrective rebound phase, and if the Pectra upgrade is successfully implemented, along with the continued expansion of the L2 ecosystem, Ethereum may regain market attention and reverse the market share gap with Bitcoin. However, if macroeconomic turmoil persists or competing blockchains further erode Ethereum's market share, the upside potential of ETH may be limited.

2) Ethereum Price Forecast 2027

If Ethereum continues to dominate the smart contract space and its scaling solutions mature, ETH may see an uptrend in 2027.

DigitalCoinPrice forecasts: ETH average price $9,580, peak $10,098.

Changelly forecast: ETH average $12,316, highest $14,527.

At the same time, the growth of the DeFi ecosystem, innovation in the NFT field, and the role of Ethereum in the tokenization of real-world assets (RWA) may bring new demand for ETH.

However, if risk assets face tightening conditions, the ETH price may face resistance, even if the fundamentals have improved.

3) Ethereum Price Forecast 2030

Long-term forecasts show that Ethereum may reach price levels that were previously unimaginable.

DigitalCoinPrice forecast: ETH average price $14,829, highest $15,108.

Changelly forecast: ETH average $40,055, highest $47,066.

However, long-term forecasts always come with risks. Ethereum faces competition from Solana, Avalanche, and emerging blockchain networks that are committed to providing lower fees and higher transaction speeds.

Although the ETH forecast models remain optimistic, it is crucial to combine technical forecasts with real-world adoption trends before making long-term investment decisions. Therefore, investments should be made with caution and without exceeding one's own risk tolerance.