Ethereum (ETH) recently dipped below the critical $2,000 mark, dropping as low as $1,993 on Binance before recovering to around $2,050. This marks the first time since April 2023 that ETH has touched such lows, shaking investor confidence and dimming hopes of a sustained recovery. Despite optimistic expectations for strong first-quarter performance, Ethereum has once again entered bearish territory amid weakening altcoin sentiment and broader market uncertainty.
The drop to $1,993 briefly pulled Ethereum below psychological support, but a wave of whale buying helped push the price back above $2,000. The rebound reached as high as $2,138.65, signaling short-term resilience. However, this bounce hasn’t yet confirmed a shift in market sentiment, as fear continues to dominate crypto trading behavior across exchanges.
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Open Interest Declines to November 2024 Levels
Current price action is unfolding with an open interest of $9.8 billion — a significant drop from over $16 billion seen in December. The decline in open interest suggests that traders are increasingly viewing ETH as a long-term holding rather than an active trading asset. As uncertainty grows, speculative activity has cooled.
Ethereum’s performance is also closely tied to the broader altcoin market. With the Altcoin Season Index falling into its lower range at 22 — though later recovering slightly to 24 — momentum has weakened across the ecosystem. Many previously high-flying altcoins have experienced deep corrections, leaving investors cautious about re-entering positions.
While Ethereum has historically been a key driver of altseason rallies, recent market fatigue — especially around meme coin volatility — has led to more conservative positioning. Notably, both retail traders and so-called "smart money" entities turned bearish on ETH within the past 24 hours.
“$ETH sentiment:
CRO wd = bearish
🟥 MP | #smartmoney = bearish #Ethereum”
— Market Prophet (@marvetProphit), March 4, 2025
Challenges to Ethereum’s Long-Term Vision
Over the past year, Ethereum’s foundational narrative has faced growing scrutiny. One major concern is inflationary pressure: despite network upgrades, ETH remains mildly inflationary due to ongoing issuance outpacing burns. Additionally, the Ethereum Foundation has not introduced major new scaling solutions recently, allowing Layer-2 ecosystems to capture much of the growth in transaction volume and liquidity.
Today, Ethereum’s primary utilities center around stablecoin transfers — particularly USDT — and hosting decentralized exchange activity like Uniswap. While these use cases remain robust, they are increasingly concentrated among long-term holders and institutional whales. New users are migrating to faster, cheaper L2 networks, raising questions about Ethereum’s future dominance.
Nonetheless, ETH retains critical functions: it secures the network through staking and serves as collateral in DeFi protocols. These fundamentals continue to support long-term accumulation, even during price downturns.
Are Sellers Deliberately Pressuring ETH?
Some analysts suggest that the recent dip may have been engineered by large sellers aiming to trigger liquidations of leveraged long positions. Despite the price drop, more than 74% of existing ETH positions remain long-term holds, indicating strong underlying conviction. Liquidity pools have thinned near the $1,900 level, increasing volatility risk.
Interestingly, the swift rebound above $2,000 squeezed many short-term traders who had bet on further declines. Yet the threat of long liquidations remains elevated if prices fail to hold key support levels.
ETH appears to be testing the $2,000 range as a pivotal zone — especially if a future rally is expected. Whale accumulation continues, though even “smart money” participants appear trapped after buying near recent highs.
“We caught a trapped whale — yes, even whales get stuck!
This whale used to buy low and sell high on $ETH, but now they're struggling.
After adding more positions and getting #Trapped, they bought another 2,000 ETH (~$4.1M) to average down.”
— EyeOnChain 🔶 (@eyeonchain), March 4, 2025
Smaller whales have also taken advantage of the dip, deploying up to $10 million in accumulation buys. For deep-pocketed investors with a long time horizon, this phase may represent a strategic entry point — even if near-term volatility persists.
External Market Pressures and Whale Movements
Another factor influencing ETH’s price is potential selling pressure from external sources. For example, reports indicate that Trump World Liberty FI moved most of its ETH holdings out of cold storage in February — a move that could precede a sale. However, sellers might also be waiting for lower prices to rebuy, using the dip to improve their cost basis.
Additionally, the Bybit hacker wallet has offloaded nearly 500,000 ETH over recent days, contributing to downward pressure. These large-scale sales can distort short-term price action but may ultimately benefit long-term buyers seeking discounted exposure.
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FAQ: Understanding Ethereum’s Current Market Phase
Q: Why did Ethereum drop below $2,000 again?
A: A combination of weak altcoin sentiment, profit-taking by large holders, and macroeconomic concerns — including potential regulatory shifts — contributed to the decline. Technical selling pressure near key support zones also played a role.
Q: Is Ethereum still a good long-term investment?
A: Many analysts believe so. Despite short-term volatility, Ethereum maintains strong fundamentals: it powers most DeFi applications, supports NFT ecosystems, and remains central to staking and Layer-2 innovation.
Q: What is the Altcoin Season Index?
A: It's a metric that tracks whether altcoins are outperforming Bitcoin. A score above 75 suggests an active altseason; currently at 24, it indicates minimal altcoin momentum.
Q: Who are "whales" in crypto?
A: Whales are individuals or entities holding large amounts of cryptocurrency. Their transactions can significantly influence market direction due to the volume involved.
Q: Could ETH fall below $1,900?
A: While possible in extreme scenarios, strong buying interest near $1,900 suggests this level may act as a floor unless broader market conditions deteriorate further.
Q: How does open interest affect ETH price?
A: Declining open interest signals reduced leverage and speculation. When traders close positions instead of rolling them over, it often precedes consolidation or trend reversals.
With inflation concerns, shifting liquidity toward Layer-2 solutions, and uncertain macro signals, Ethereum stands at a crossroads. Yet persistent whale accumulation and structural demand from DeFi suggest that this dip may be temporary.
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