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Joel Frank
Author
Joel Frank
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The Ethereum (ETH) price is on the back foot on Friday, the final trading day of the year in traditional financial markets, and is threatening a break back below $3,300.
ETH’s recent rejection of resistance at $3,500 in the form of the 50DMA and some support-turned-resistance signals that the bears are currently in control of this market.
The Ethereum price look to be at risk of a short-term dip back to $3,000, a key area of recent support, a key psychological level and where the 200DMA resides.
ETH’s bearish price action began on the 18th of December, the day the Fed sent shockwaves through financial and crypto markets by signaling fewer than expected interest rate cuts in 2025.
That spoilt the party in December for US equities and crypto, though most major cryptos, ETH included, are set to end the year with big gains.
So, if the Ethereum price is on the cusp of a near-term drop to $3,000, should investors be prepared to buy the dip? Yes. Here’s why.
Buy Ethereum Price Dips – 2025 Is Set to Be A Strong Year
A drop back to $3,000 could be a great dip buying opportunity for Ethereum investors willing to tolerate some near-term turbulence in the market.
That’s because 2025 could be a historic year for the Ethereum price.
The last two years in crypto have been marred by a US SEC intent of killing as much innovation in the crypto space as possible.
Sure, they were begrudgingly forced to approve spot Ethereum ETFs earlier this year. But they, alongside the broadly anti-crypto Biden administration, did everything they could to harm the industry.
However, US crypto markets are on the cusp of entering into a new golden age, with the pro-crypto Trump administration set to arrive in the White House on the 20th of January, and a new pro-crypto Republican control Congress also to start in a few short weeks.
Ethereum is likely to secure new spot ETFs that permit staking in 2025 – these could attract substantially more demand than the existing, zero yielding spot Ethereum ETFs.
Not that these ETFs haven’t been attracting decent demand in recent weeks. Per data presented by The Block, Ethereum ETFs have attracted strong demand nearly every day since Trump’s election victory.
Ethereum also retains its commanding lead in terms of DeFi market share. Per DeFi Llama, TVL on Ethereum is over $67 billion, around 56% of the value of total crypto assets locked in smart contracts.
Yes, its not the fastest chain, or the cheapest. But its far and away the most trusted DeFi chain, which likely explains why BlackRock has chosen to focus on it, launching its first on-chain money market fund there in 2024.
BUIDL has already amassed nearly $500 million in assets, per DeFi Llama, with further rapid expansion likely in 2025.
All of the above talking points suggest that 2025 is likely to be a very strong year for ETH, and that it is likely to retain its leadership position in the altcoin market.
Wen ATHs?
So, if investors should buy the dip in anticipation of a rally, when can they expect the good times to arrive?
Or, more specifically, wen all-time highs?
Well, Ethereum’s historic relationship to Bitcoin suggests they might not need to wait long.
Bitcoin entered a new phase of price discovery in November, almost perfectly as its traditional cycle around the BTC halving would anticipate.
In past cycles, Ethereum has tended to lag bullish Bitcoin price breakouts by up to two months.
Meanwhile, January has also historically been a strong month for ETH. So the stars could be aligning for a rapid pushback to record highs for the Ethereum price.
Once the Ethereum price snaps above its 2021 highs in the $4,800 area, it’s off to the races.
In its 2021 bull cycle, ETH rallied slightly beyond the 4.236 Fibonacci extension from its 2020 lows back to its prior 2017 highs.
If it can repeat this feat in 2025/2026, that would imply an Ethereum price of nearly $18,000, over 6x up from current levels.
That may seem unrealistic. But if the US does kick off a global race to accumulate Bitcoin by announcing a strategic Bitcoin reserve next year, that could result in fairly quick 5-6x gains for BTC.
Investors would then also likely want exposure to the top smart-contract-enabled DeFi chain in the space, with Ethereum likely to be their first pick.
Crypto is full of surprises. Assets can fall much further, much faster than most investors expect in a bear market.
But by the same token, assets can rip much higher, much faster than many expect during a bull.
