• Ethereum dropped 35%, raising concerns about a controlled liquidation event.
• Key support at $2,125 holds, but indicators suggest further downside risk.
• A break below support could lead to a deeper decline toward $730.

Ethereum—ETH, crashed 35% in a single move, leaving traders in shock. Bitcoin remained relatively stable, yet ETH plunged far more than expected. Many suspect a controlled liquidation, using the trade war dump as a cover. The sharp contrast between Bitcoin and Ethereum suggests manipulation rather than natural selling. Despite the drop, Ethereum bounced 20%, showing signs of resilience. With support still holding, traders now question whether a full recovery remains possible.

Ethereum Faces Strong Resistance After Rejection

Ethereum struggled to break past $4,000 multiple times. Each attempt led to rejection, preventing a new all-time high. December 2024 showed promise, but momentum faded again. This failure triggered a 40% decline, bringing ETH back to a 966-day ascending support trend line. On February 3, Ethereum fell to $2,125, barely staying above the 2024 low of $2,100.

A quick rebound followed, pushing the price back above $2,450. This bounce validated strong support, but technical indicators remain bearish. The RSI dropped below 50, and the MACD formed a bearish cross. These signals suggest further downside risk. The daily chart shows a concerning pattern.

Ethereum at a Crossroads: Reversal or More Pain?

Elliott Wave analysis offers one last bullish scenario. Ethereum may have completed wave four of a five-wave pattern that began in 2018. This setup could push prices toward $7,331 if momentum returns. However, unusual wave formations create uncertainty around this outlook.

A drop below $2,125 would confirm a larger bearish trend. The entire price increase from this cycle may have been a corrective move. A deeper decline could target $730, aligning with past market corrections.

Ethereum now stands at a critical point. Traders must watch key support levels closely. A strong bounce could signal a reversal, but more weakness may confirm that this crash was just the beginning of a larger downtrend.

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