Is Ethereum (ETH) About to Bottom? A Hidden Signal Every Investor Should Know

ETH’s market stability hinges on liquidity returning soon.

Ethereum (ETH) noted a mild rebound and is currently trading above $3,000 this week after briefly plunging near $2,950 amidst fragile market sentiment. The asset did regain some footing, but it remains down nearly 5% over the past 24 hours and about 22% monthly.

Analysts suggest that the altcoin’s next upward move depends on liquidity restoration.

ETH’s Next Expansion Leg

Ethereum’s liquidity has reportedly “fully reset,” and such a trend has historically preceded major market bottoms. According to the analysis shared by Altcoin Vector, collapses in liquidity tend to trigger multi-week bottoming phases rather than immediate structural breakdowns, which offers a window for stabilization.

ETH is currently in this bottoming phase, and recovery prospects are hinging on liquidity rebuilding in the coming weeks. If liquidity returns, it could pave the way for the next expansion leg in the market. However, Altcoin Vector warned that delays in liquidity recovery may extend the slow consolidation period and potentially leave ETH’s market structure increasingly exposed to risk.

“The risk: the longer liquidity takes to return, the longer the slow grind can persist, leaving ETH’s structure increasingly vulnerable.”

Meanwhile, crypto analyst Ted Pillows said Ethereum could fall further after dipping below the $3,000 mark. In a recent tweet, he noted that the rebound so far has been weak, as he indicated the possibility of another drop. Pillows said ETH might test the $2,800-$2,900 range before finding a local bottom.

Another market expert, “Daan Crypto Trades,” also noted that ETH is still holding the 0.618 Fibonacci retracement zone after sweeping its November 4 low, and described the crypto asset as “in the middle of nowhere.” He added that a move above $3,650 is needed to improve the outlook. On the other hand, a failure could push $2,800 into focus as a key support-resistance level.

Opportunity

Beyond price action and liquidity, experts also believe that ETH is waiting for fresh investor participation to support its next leg higher. Upon gauging the New Depositors metric, which tracks retail interest and inflows, CryptoQuant found that despite ETH testing the $4,000-$5,000 range earlier this year, new user activity has remained muted. This lack of broad participation makes the trajectory fragile, leaving it vulnerable to consolidation or sharper pullbacks, as the price does not see any fresh demand.

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Previous instances show a similar pattern. In summer 2020, ETH climbed from $250 to $400 with low new depositor activity before a brief correction, after which the main bull wave began. Early 2024 saw ETH rise from $2,500 to $4,000 ahead of ETF approval, again with flat new depositor levels, stalling above $4,000 before surging post-ETF catalyst. Hence, the current pullback may serve as a corrective phase to attract new users, which could potentially set the stage for a recovery toward $6,000-$7,000 in the short to mid-term.