The start of 2025 was not favorable for the price of ETH. Although the accumulated drop is around 30%, at its lowest point it fell by 60%, touching the zone of USD 1,400. This setback generated not only discontent among investors in the crypto ecosystem but also a growing distrust towards the project.
We know that the new tariffs imposed by Donald Trump in April exacerbated the decline of all markets. However, the price of ETH has suffered more than normal, testing areas where the asset had even accumulated during 2022 and 2023.
Recovery driven by Bitcoin and the Pectra update
Despite this entire scenario, the recovery of Bitcoin's price provoked a wave of confidence in the rest of the crypto market. Consequently, the price of ETH did not take long to react.
In addition, the new Pectra update in Ethereum took place on May 7, which provided a series of improvements for its scalability and staking limits. This was positively received by the market, driving the price up to USD 2,300. Reaching these levels was possible thanks to the liquidity generated by the liquidation points of leveraged short positions that were betting negatively on the price.
What can we expect from now on?
After liquidating most short positions, the price will tend to a slight lateralization, to accumulate more liquidity in the zone of USD 2,600 and re-enter the price range from the beginning of the year.
Controlled issuance and reduced supply pressure
If we analyze the monetary status of ETH, we can see that since its last all-time high in 2021, the amount of coins has not increased much. In fact, over the last three years, it has remained constant at 120 million tokens, with an Annual Issuance Rate of around 0.07%.
Increase in circulating ETH since January 2017. Source: Trading Different
This was made possible by the implemented burn system, and it is a very positive fact, as the demand does not have to face new supply in the market for the asset to recover its all-time highs.
