 ▲ Ethereum (ETH) |
Ethereum (ETH), which has plunged nearly 40% over the past month and fallen for six consecutive months, is now flashing its worst warning signal in history, with the possibility of collapsing to the $1,500 level.
According to DL News on February 19 (local time), Max Shannon, senior research analyst at crypto asset manager Bitwise, warned that Ethereum faces the risk of an additional 22% drop to $1,500, potentially marking the longest downturn in its history. If weakness continues into March, it would match the seven consecutive monthly declines recorded between May and November 2018. Shannon noted that unless a clear macroeconomic or asset-specific catalyst emerges to revive momentum and investor sentiment, Ethereum’s downside risk remains open below $1,500.
Bitcoin (BTC), the market leader, has been identified as a key factor behind the slump. Shannon explained that Ethereum behaves as a high-beta asset with strong correlation to Bitcoin. While it tends to move in sync with Bitcoin, its price swings are far more pronounced, meaning that when Bitcoin falls 10%, Ethereum often posts even steeper losses, deepening the downturn.
What makes the situation more painful is that the market is currently fixated solely on price charts, overlooking Ethereum’s solid fundamentals. Positive factors abound, including growing global regulatory clarity, the launch of U.S. spot Ethereum ETFs, and the $300 billion stablecoin market that relies heavily on blockchain infrastructure. Even BlackRock CEO Larry Fink has publicly acknowledged its value, underscoring the favorable environment. Despite this, returns for investors remain disappointing.
However, some signs of hope are emerging. The heavily bearish sentiment that had dominated the options market appears to be easing somewhat. A significant concentration of options positions sits in the $2,100 to $2,400 range. If Ethereum rebounds by around 10% to 20% and enters that range, options dealers may be forced to buy spot positions to hedge their exposure, potentially triggering a positive chain reaction similar to a short squeeze.
Ultimately, a genuine trend reversal will require substantive momentum. Shannon projected that Ethereum could advance toward new all-time highs only when several factors align, including the passage of U.S. crypto market structure legislation such as the CLARITY Act, the revival of Digital Asset Treasuries (DATs, crypto treasury strategy firms), and sustained buying pressure from spot ETFs absorbing more than 100% of newly issued supply.
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