Ethereum is approaching its all-time high after a strong price rally, but well-known trader Michaël van de Poppe is advising investors to be cautious. In a recent market update, he pointed out why ETH could be stretched too thin in the short term and why partially taking profits could be a smarter move.

The Price Increase of Ethereum and the Risk of Mispricing

Ethereum has risen over 120% in less than two months, from around $1,500 to over $4,700. Van de Poppe compares the current increase to Ethereum's lows in 2022 when the coin traded near $1,300 after a sharp drop from $4,800. At that time, the downside risk was very limited, and the upside potential was enormous.

Currently, Ethereum seems to be "slightly overvalued on the upside," he said. The last time ETH hovered around $4,000 earlier this year, it suffered a severe correction of 65% down to $1,380. Van de Poppe warns that the risk of buying at this price is significantly higher.

Why Taking Profits Is Important

This trader emphasizes the necessity of securing profits rather than holding during volatile periods. "If you avoid taking profits, you risk getting stuck in the next bear market," he said, noting that compound profits are a better long-term strategy than just hoping the price will go higher.

To illustrate, Van de Poppe shared a portfolio scenario. He stated that selling 30% of the ETH holdings after a major price increase would minimize the impact of the correction and also provide cash to buy back at lower prices. Thus, investors can accumulate more ETH over time while still managing risk.

On the chart, Ethereum is showing signs of being overbought. Van de Poppe points out the high RSI across multiple time frames and notes that trading volume indicates that short positions have been liquidated while long positions are being heavily sold off.

He also highlighted past examples when ETH surpassed previous highs but then dropped sharply by 40–50% shortly after. He added that it would not be surprising for the price to drop back to the $3,600–$4,000 range.

Potential Shift to Altcoins

According to Van de Poppe, the cash flow cycle in cryptocurrency moves from Bitcoin to Ethereum, and then to altcoins. He mentioned that ETH is entering a volatile phase, in which liquidity shifts to ecosystem projects like Optimism, Arbitrum, and other projects that still have upside potential. "Nothing goes up forever," he said. "Locking in profits right now ensures you are safer than regretting later."

Although Van de Poppe believes that Ethereum remains strong in the long term, he argues that short-term risks are leaning towards the downside. Therefore, he recommends reducing 20–40% of the ETH holdings, taking profits, and maintaining flexibility for the next buying opportunity.