Ethereum (ETH) experienced a volatile start to the week, plummeting 16% to $2,100 after a brief but powerful rally sparked by political developments and internal foundation changes. Despite a weekend surge that pushed ETH from $2,200 to $2,550—a 15% jump—short-term traders quickly locked in profits, leading to a sharp reversal. This abrupt shift underscores the fragile balance between bullish sentiment and market resistance, especially with $1.8 billion in short positions now forming a formidable barrier above $2,400.
ETH Rally Stalls at $2,500 as Traders Lock in Gains
The weekend saw a dramatic rebound in Ethereum’s price following a major announcement from former U.S. President Donald Trump. On March 2, Trump unveiled an executive order proposing a national crypto strategic reserve—an initiative designed to strengthen America’s position in the digital asset space.
Initially, the announcement listed Solana (SOL), Cardano (ADA), and XRP as included assets. However, within an hour, Trump clarified that both Bitcoin (BTC) and Ethereum (ETH) would also be part of the reserve, correcting earlier omissions and reigniting investor enthusiasm.
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This clarification triggered an immediate reaction: ETH surged 15% within hours, climbing from $2,200 to $2,550. The rally reflected strong market sensitivity to high-profile endorsements and policy signals—especially those suggesting institutional adoption.
However, momentum stalled on Monday as short-term traders seized the opportunity to cash out. A wave of profit-taking led to a steep 16% correction, pulling Ethereum back toward the $2,100 support zone.
This sell-off wasn’t isolated to ETH. All five cryptocurrencies named in the strategic reserve proposal saw significant declines on Monday, indicating a broader pattern of “sell the news” behavior across the market.
Such reactions are common in crypto markets, where speculative traders often front-run major announcements. While fundamental catalysts remain positive, short-term price action is frequently dominated by sentiment swings and leverage dynamics.
Ethereum Foundation Leadership Overhaul Boosts Long-Term Confidence
Beyond political headlines, another critical development could shape Ethereum’s long-term trajectory: a leadership restructuring at the Ethereum Foundation.
On February 28, the foundation announced that Hsiao-Wei Wang and Tomasz Stańczak would serve as co-executive directors, replacing Aya Miyaguchi, who transitioned into the role of board chair.
This shift comes at a pivotal time for Ethereum. Past network upgrades have faced delays or mixed reception, while rising token emissions have raised concerns about supply pressure. Investors view this leadership change as an opportunity to restore focus, improve execution, and accelerate innovation—particularly around scalability and sustainability.
While the full impact won’t be immediate, the move signals institutional maturity and governance evolution—key factors for attracting institutional capital over time.
Together with the potential implications of U.S. crypto reserves, this leadership transition forms a dual bullish narrative: one driven by external adoption forces, the other by internal strengthening.
Yet, despite these positive undercurrents, short-term price action tells a different story.
Short Sellers Deploy $1.8 Billion in Leverage Below $2,400
Market data reveals that bearish sentiment has regained control in the immediate term. According to Coinglass, short sellers capitalized on Monday’s downturn by deploying $1.8 billion in leveraged short positions—far exceeding the $832 million in active long leverage.
This gives shorts a 55% dominance in short-term trading capital, reflecting renewed confidence among bears that upward momentum has stalled.
Notably, a large concentration of these short contracts is clustered around the $2,400 price level. Traders holding these positions have likely set stop-loss orders above this threshold, meaning any sustained breakout beyond $2,400 could trigger a cascade of forced buybacks—potentially fueling a short squeeze.
For now, however, the market remains range-bound. The presence of such concentrated resistance suggests that unless buying pressure intensifies significantly, Ethereum may struggle to reclaim key levels.
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ETH Price Outlook: Bearish Control Persists Amid Key Technical Levels
From a technical perspective, Ethereum remains under bearish pressure. The latest rejection at $2,489—the midpoint of the Keltner Channel—confirms seller dominance on the daily chart.
With price action confined below this key moving average band, the path of least resistance appears downward. The next major support lies at $2,066, the lower boundary of the Keltner Channel. A break below current levels could accelerate selling and test this floor.
The Accumulation/Distribution (A/D) indicator further supports this bearish outlook. Currently reading at 132.89 million, it shows declining buying interest and ongoing capital outflows—consistent with the 16.77% daily drop observed on Monday.
That said, there are early signs of potential resilience. A recent bullish candle showing a 15.93% rebound indicates that some demand still exists near lower levels. More importantly, this suggests that liquidity above $2,400 is being gradually absorbed—a possible precursor to a breakout if momentum shifts.
A decisive move above $2,489 could invalidate the current bearish structure and open the door for a rally toward $2,912. Until then, Ethereum remains vulnerable to further downside.
Frequently Asked Questions (FAQ)
Q: Why did Ethereum drop after Trump’s crypto reserve announcement?
A: Despite initial optimism, many short-term traders used the rally as an opportunity to lock in profits—a classic “sell the news” scenario common in volatile markets like crypto.
Q: What does the Ethereum Foundation leadership change mean for investors?
A: The new co-executive directors bring fresh leadership amid challenges around network upgrades and supply management. While not an immediate price driver, it signals improved governance and long-term strategic focus.
Q: Is the $1.8 billion in short positions dangerous for ETH?
A: In the short term, yes—it creates downward pressure. But if ETH breaks above $2,400, those shorts could be forced to cover, triggering a short squeeze and rapid price increase.
Q: What is the next major support level for Ethereum?
A: The Keltner Channel lower band at $2,066 is the next key support. A breakdown below $2,100 could accelerate selling toward that level.
Q: Can ETH recover and reach new highs in 2025?
A: Long-term potential remains strong due to institutional interest and ecosystem growth. However, short-term recovery depends on overcoming resistance at $2,489 and reducing bearish leverage.
Q: How do political events affect Ethereum’s price?
A: High-profile endorsements and policy proposals—like a national crypto reserve—can boost sentiment and drive short-term rallies by signaling potential adoption and legitimacy.
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Final Thoughts
Ethereum stands at a crossroads. On one side: powerful catalysts including political endorsement and organizational reform that bolster long-term confidence. On the other: intense short-term selling pressure and technical resistance that constrain upside.
While the $1.8 billion short wall below $2,400 poses a near-term challenge, it also sets the stage for a potential explosive move if bulls regain control. For investors, monitoring leverage trends, on-chain activity, and macro-level developments will be crucial in navigating the next phase of Ethereum’s journey.
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