Summary Ethereum has dropped nearly 50% from its December 2024 highs, presenting a potential 30% bounce opportunity based on current levels and historical patterns. Key levels to watch include $2,600, $2,500, and short-term ranges from $2,000 to $2,320, with a stop placed below $1,500. The main risk is the equities market; a relief bounce could trigger a similar reaction in crypto, particularly ETH. Bitcoin remains dominant, but a short-term bounce in ETH/BTC could see altcoins gain market share temporarily. Summary Crypto has had a crazy start to 2025, to say the least. Altcoins have been bleeding for the past few months, with Bitcoin slowly following behind—along with equities. Today, I want to discuss a potential trade idea for Ethereum ( ETH-USD ), as the market has dropped nearly 50% from its December 2024 highs of $4,000 per coin and now sitting at 1850s. I'm seeing potential for a 30% bounce on Ethereum based on the levels I'm watching. However, this is not a guarantee—nothing in the markets is (no free lunch). I'll have to play this level by level. Monthly Chart Let's start by analyzing the monthly chart. In 2022, while the market was in a bearish phase, from its all-time high the market sold off approximately 55% , bounced back, and again started its downward move creating a lower high. Now if we look at the recent data and mark the local high down to the recent low, the market has fallen approximately the same number, around 57% -which is basically the same major drop that happened in 2022. TradingView (ETH) We are also seeing a retest of the prior consolidation zone that preceded the rally in October 2023, when the overall markets bottomed and began their next leg up. This is a level where I would expect a potential reaction. Does that mean we'll bounce here and head toward all-time highs? Very unlikely. However, the point of this trading level is that there is potential for some kind of bounce. Weekly Chart Zooming into the weekly chart, I've annotated the overall trend that has been respected since the COVID low in 2020. This marks the fourth touch of this trendline, coinciding with the monthly consolidation zone I highlighted in the chart above. TradingView (ETH) The first orange-shaded area outlines the move from the low after the 55% correction from the 2022 top. This pattern is one that I'm paying attention to currently. Will I expect it to be replicated? No. Still, I'm using it to frame a potential bounce at this key area. It could be a 20% bounce, a 25% bounce, or even a 50% bounce. Or maybe not a bounce at all: this is where matters of risk management come into play, which is to be discussed later. Daily Chart Now lets take a look at the current daily chart. I've marked out the current trading range, from the high of 4,109 and the low of 1,752. The 50% level of this range is at 2,931 , which is just around a 50% move from current levels. This level would be my strong bull case short term level as in the final level I'd look to close this potential trade idea. TradingView (ETH) Below this level, we have clear areas where price previously rejected and formed resistance. The $2,600 range was a consolidation zone before the market moved lower. This will be a crucial level to watch, as any signs of weakness here would require trade management. Below that, we have the recent rejection that occurred on the Monday following the news about the Crypto Reserve. This level sits around the low $2,500s . Below these levels I am watching short term ranges from: 2000s (Would like to see a reclaim) 2150s 2320s H4 Chart The overall trend on the lower timeframes has remained bearish, so this is something I would need to see shift. We’ve started to see the potential for a short-term bottom here in the $1,700s. TradingView (ETH) In terms of market structure, I would want to see the H4 chart start forming higher highs and higher lows, signaling the potential daily/weekly retracement I'm looking for. Current Trade (Risk Management) I've provided my current trade thesis below. I will not be holding this trade all the way to the $2,900s. At the end of the day, I have no idea if ETH will have the momentum in the current environment to make a move that high, which is why I have significant levels before then within my analysis. TradingView (ETH) The stop placement here is important. This is not a random stop placed in the $1,500s because I don't want to lose a certain amount. Within my system, this is where I have to place it, as it's below a key weekly low from October 2023, where price retested the weekly trendline I discussed. This is ultimately where I would believe the bull-case bounce is unlikely. Seasonality Talk Like I discussed in my recent bull case for Bitcoin , the main risk here is equities. Based on the seasonality trend from the last 20 years, the markets typically see a potential bottom around February and March and then start to trend higher. I'm not taking this as a potential bottom signaling the continuation of the ultimate bull run we've been in, but I think this data can help frame the situation. If we do see a decent bounce before continuing lower in equities, that would, in my view, be enough to trigger a bounce in BTC/ALTs. EquityClock ETH/BTC I'm sure there are no surprises here, as I constantly preach that Bitcoin is the crypto market. BTC has outpaced ETH since 2022. The ETH/BTC pair is currently trading at the lows from December 2020! TradingView (ETH/BTC) Again, do I think this is the ultimate bottom here? Not really. I still believe Bitcoin is the dominant long-term market. But with how things are aligning, it makes sense to me that we could see the start of a potential bounce, where Bitcoin might lose some of its market share in the short term, giving altcoins a squeeze higher. Conclusion & Risks As I've stated, the main risk here is the equities market and whether we can finally see some sort of relief bounce. I believe that the macro view is still a bit shaky, and I doubt we’ll see a move straight back up toward ATHs in any risk-on markets, but that isn’t what I'm looking for here. I've started a position and outlined my key levels that I'll be watching, along with potentially locking in profits depending on how the market reacts around these price points. I hope this analysis helps and gives you another perspective on the crypto markets, especially the potential short term price action on ETH.
