The crypto market has faced severe turbulence throughout February 2025, with Bitcoin plunging to a low not seen since 2021, trading around $86,000. Ethereum, the second-largest cryptocurrency by market cap, has also been under intense pressure, falling below $2,500. This drop was partly triggered by a massive $1.5 billion hack on Bybit, which many analysts attribute to the North Korean Lazarus Group. The hack sent shockwaves throughout the market, causing a 25% price crash in Ethereum.

Bearish Signals Mount for ETH

Ethereum’s recent price movements have painted a bearish picture, with the cryptocurrency breaking below key support levels. The breakdown indicates that the asset could be heading for further downside, with many analysts drawing comparisons to past capitulation events seen in April and August. In those instances, Ethereum experienced significant sell-offs, and analysts are warning that ETH could potentially bottom out below $1,000 if the current bearish trend continues.

One of the major contributing factors to Ethereum’s struggles is the broader macroeconomic environment. The Federal Reserve’s stance on quantitative easing (QE) remains tight, with no signals that liquidity will be injected back into the economy anytime soon. If the Fed maintains this hawkish policy, Ethereum’s chances of staging a quick recovery are slim, and the price could drop further, possibly reaching the $1,500 level or even approaching sub-$1,000 territory before stabilizing.

ETH’s price has also been influenced by the massive hack on Bybit. The hack caused a ripple effect throughout the crypto ecosystem, pushing many traders into a defensive stance and triggering massive sell-offs. The resulting panic caused Ethereum to lose substantial value, adding to its already fragile position within the market.

Potential for a Recovery

Despite the current market struggles, some analysts remain cautiously optimistic about Ethereum’s long-term prospects. A key factor in ETH’s potential recovery is the Federal Reserve’s monetary policy. Historically, Ethereum has performed well during periods of quantitative easing, as the injection of liquidity tends to boost risk assets like cryptocurrencies. If the Fed shifts its stance and starts introducing more liquidity into the market by March 2025, Ethereum could see a substantial rebound.

Crypto analyst TraderPA, known for his keen market insight, has pointed out that Ethereum is currently oversold. In his analysis, ETH is trading within its largest historical order block, suggesting that the cryptocurrency could be on the verge of a rebound. Despite the current bearish outlook, TraderPA remains confident that Ethereum could recover if market conditions improve and the broader economic landscape shifts in favor of risk assets.

The possibility of Ethereum climbing back to higher levels, such as the $3,500 to $4,000 range, is still on the table. However, this would require Ethereum to hold its ground above $2,000 and for market sentiment to shift. Given Ethereum’s past resilience, many traders are hoping for a repeat of previous recovery patterns.

Market Sentiment and Investor Outlook

Currently, Ethereum’s market sentiment remains under heavy pressure. However, despite the ongoing downtrend, some investors are holding on to their positions, anticipating that the cryptocurrency may eventually bounce back. A significant recovery could take place once the market stabilizes, particularly if there’s a shift in Federal Reserve policy and a broader risk-on sentiment returns to the market.

For now, Ethereum’s price remains volatile, and further downside is possible. However, for those looking for long-term growth potential, ETH might be a worthwhile investment if it can recover above $2,000. Should the macroeconomic environment turn favorable, Ethereum could be positioned for a strong rebound, much like it has done in previous cycles.