The second largest cryptocurrency by market cap, Ethereum , has taken a serious downturn. Over the last seven weeks, the network’s market cap has dropped a steep 36% from its local high. Investors and traders are now very concerned. What is happening? The downturn has coincided with a marked drop in the number of Ethereum tokens that are currently in profit. We’re seeing a negative sense of sentiment that has many retail traders just unloading their tokens. The underperformance in price compared to other large “cap” cryptocurrencies has left many questioning: can Ethereum recover? Ethereum's market cap has dropped -36% since its local high just 7 weeks ago. The result has been a stark drop in the amount of ETH tokens in profit since their date first mined. On the daily close, we are seeing the lowest percentage in profit in over 4 months, and lowest… pic.twitter.com/ze8uVeWqfA — Santiment (@santimentfeed) February 8, 2025 Ethereum’s Market Struggles and Profitability Decline The recent trend of profitability in Ethereum tokens has taken a sharp turn for the worse. Recent data shows that far fewer Ethereum tokens are currently in profit compared to previous months. In fact, the percentage of Ethereum that is in profit is at its lowest since April. To make matters worse, Ethereum’s profitability mound is facing such a steep downturn that it’s showing us the least amount of coins in profit since May. This is undoubtedly spelling a loss for a whole bunch of Ethereum investors across the board—especially the ones who got in early and have held on through this slump. This sustained downward spiral has been especially pronounced when you think about how Ethereum used to hold such dominance in the market. Once regarded as the top-tier, foundational blockchain for decentralized finance (DeFi), smart contracts, and non-fungible tokens (NFTs)—Ethereum’s recent performances have shoved it under the spotlight in terms of what not to do in the cryptocurrency space. These days, it pales in comparison to the sorts of upswings witnessed by other large-cap cryptocurrencies, like Solana, Binance Boin, and even Bitcoin. Retail Sentiment: Fear, Uncertainty, and Doubt (FUD) Driving Sales The Ethereum market has been permeated with Fear, Uncertainty, and Doubt (FUD) in recent weeks. This is mainly because traders and retail investors—who have a lower risk tolerance and are especially sensitive to price volatility—have lost faith in Ethereum due to its consistent underperformance. Retail investors have subsequently begun to dump their ETH holdings. Presto! Instant negative sentiment. And this negative sentiment looks like it is going to continue for a while because the dumping of Ethereum by retail traders seems to have only just begun. Market generally has been negative—extremely negative. Ethereum has been seen as an underachiever compared to the other big cryptos. Number two in market cap, but Ethereum now finds itself in a tighter race, with other networks not seen as rivals gaining ground. Networks like Solana and Avalanche—for them, user activity is going way up. Why? Faster transaction speeds. Lower fees. Au revoir, Ethereum. On February 7, the Bitcoin spot ETF had a total net inflow of $171 million. The Ethereum spot ETF had a total net inflow and net outflow of $0.00. https://t.co/59u0BnEqLG pic.twitter.com/AIlVjXAx4g — Wu Blockchain (@WuBlockchain) February 8, 2025 Even though Ethereum has faced difficulties lately, there might still be a promising sign on the horizon. Retail traders may be selling off their assets, but a committed development community is continuing to work on the network. They remain unwavering in their belief that the network holds potential, and they are attempting to realize that potential through development work. The transition to a proof-of-stake consensus mechanism, which is part of the Ethereum 2.0 upgrade, is still in progress. The Ethereum Spot ETF: A Sign of Market Inactivity Further underscoring Ethereum’s recent market performance is the Ethereum spot Exchange-Traded Fund (ETF), which had a rather mystifying day on February 7. The ETF recorded a combination net inflow and outflow of $0.00. That “0” in the inflow line might as well have been a “caution” light for the whole Ethereum market. ETF investors are not making moves, and this lack of moves could be interpreted as a lack of conviction about the Ethereum market in general. If the ETF is representing a cautious accumulation phase for Ethereum, then either side, bulls or bears, could be waiting until the next clear price signal before making a move. At the same time, Ethereum’s spot ETF is performing poorly, and this flat performance reflects a larger trend of indecision in the markets. Meanwhile, Ethereum’s price is in a downward spiral and retail sentiment is struggling. It seems that institutional investors may be taking a wait-and-see approach, perhaps opting to let the dust settle before making any large trades in either direction. If anything, these big players are likely keeping an even closer watch on the transition to Ethereum 2.0 and on whether it allows Ether to regain its competitive edge within the increasingly diverse and rapidly evolving crypto ecosystem. Potential for Recovery: Could Ethereum Bounce Back? Although Ethereum’s market slump and the emerging unfavorable sentiment might appear forbidding, they conceal something else: potential. It’s a situation that the Ethereum Foundation undoubtedly hopes won’t ever become the stuff of history, but it is still a reasonable enough precedent to bring up in discussing the current state of Ethereum. The cryptocurrency market is often more or less in a single phase together, rendering the Ethereum situation either more or less bleak. However, within that mode, the Ethereum Foundation is making progress in rendering either the current or a future iteration of the Ethereum network a place where transactions either cost less to make or happen so quickly that it hardly matters. To sum up, the latest market performance of Ethereum has not lived up to expectations, with the asset undergoing a steep plummet in its market cap, having fewer tokens in the profit zone, and experiencing a negative swing in the sentiment of traders and investors. But the cryptocurrency’s potential for resurgence remains quite palpable, especially if the Ethereum 2.0 upgrade unfolds in the way its creators promise and takes care of the network’s several outstanding problems. Still, the traders and investors who keep a close eye on these things surely will be watching to see whether Ethereum makes any distinct moves—upward or downward—in the next little while. Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services. Follow us on Twitter @nulltxnews to stay updated with the latest Crypto, NFT, AI, Cybersecurity, Distributed Computing, and Metaverse news ! Image Source: baon/ 123RF // Image Effects by Colorcinch
