The second largest cryptocurrency, Ethereum has found immense resistance at the hands of the resistance it is finding to break over $3,400. Now that Ethereum faced nearly six weeks of a drastic downtrend and touched below the levels of $4,000 for the very first time on 16 December, 2024, its decline has more than 20%, and its trading price floats at around $3,260. Despite these recent losses, Ethereum is still one of the most influential blockchain platforms, and its price fluctuations are often seen as indicators of the broader cryptocurrency market’s health. Analysts and traders are keenly watching Ethereum’s performance, as many believe that it could rebound and reach new highs if certain conditions are met.

Ethereum’s Current Market Struggles
As of February 2025, Ethereum faces significant hurdles in reclaiming its previous highs. The price of the cryptocurrency has become stuck at the resistance level of $3,400, and most traders and analysts believe that a breakout past this level is the only way that Ethereum will break through to its next major milestone: $4,000. This breakout may be enough to set off the liquidation of more than $1.09 billion in leveraged short positions, as indicated by data from CoinGlass. It means that this liquidation would cause a lot of impact on Ethereum’s price movement, hence likely to have a short-term burst that propels the price higher and even lays the stage for the next bull run.
Ethereum’s price has been in the range of below $3,400 for several weeks now. Given this, analysts focus the power to massive action towards the price region of $4,000 on increased blockchain activity, new use cases, and sustained rise in adoption. A lot about Ethereum’s current price move is being controlled by sentiment, market momentum, and other external factors, rather than organic long-term growth drivers in the form of technology developments and improved real-world adoption.
Struggle of Ethereum with Blockchain Activity and Competitiveness
Ethereum has been the blockchain leader for quite a long time, but there is growing competition from other layer-1 networks that are catching up fast on transaction fees, application deployments, and staking activity. Although Ethereum 2.0 reduced gas fees and changed the consensus mechanism to proof-of-stake, it is still relatively high compared to some newer blockchain platforms. This has made developers and users look elsewhere towards other blockchain networks, such as Solana, Avalanche, and Polygon, each offering lower transaction costs and processing speeds.
According to Aurélie Barthere, principal research analyst at Nansen, Ethereum needs to boost its fundamental blockchain activity to remain competitive. If it fails to significantly improve transaction throughput, dApp development, and ecosystem scalability, Ethereum may lose its market dominance to newer networks with more attractive offerings. According to Barthere, Ethereum needs stronger partnerships with private companies, government entities, and other blockchain projects to ensure long-term sustainability.
Institutional Support and Adoption in the U.S. Market
One of the key drivers behind Ethereum’s possible recovery is that institutional and governmental sectors are starting to take more interest in blockchain technology. While Ethereum has been at the heart of the blockchain revolution, the true potential for it might just be unlocked when it sees a stronger collaboration with private companies and government institutions.
Specifically, its engagement with the United States government would be critical for its further success. Reports already indicate that a Department of Government Efficiency (DOGE) run by Elon Musk has explored utilizing blockchain-based systems for saving the government costs. This would entail expense tracking as well as general financial management systems. A non-governmental agency focused on improving public sector efficiency, DOGE, is rumored to have held a meeting with Ethereum developers to advance blockchain solutions. These meetings are speculative, but they suggest future institutional adoption can help Ethereum.
On the other hand, Ethereum may benefit from increased adoption with potential ventures connected to the Trump family. Ethereum co-founder Joseph Lubin, who founded the blockchain company Consensys, has even hinted that the Trump family may be looking at a new cryptocurrency business based on Ethereum. This could open up new avenues for Ethereum and enhance its adoption by investors, businesses, and even governments.
Options Market for Ethereum is Showing Rising Optimism
One of the most critical indicators of the sentiment of the trader is the options market on Ethereum, which has been booming lately. As per a report from Bybit and Block Scholes, trading volume in Ethereum options has just hit its highest level in more than a month. The upsurge in options activity means that traders might be positioning themselves for a possible price rebound in the near term.
Call options, which enable investors to bet on a price increase, have become particularly popular, indicating growing optimism among traders about Ethereum’s future performance. The shift in options skew towards more bullish positions suggests that the market is preparing for a potential rally, although analysts caution that options activity alone cannot drive Ethereum’s price upwards. For sustained growth, Ethereum needs stronger market fundamentals, such as increased blockchain activity, innovative use cases, and widespread adoption.
What Would Fuel Ethereum’s Bullish Breakout?
Analysts believe the main event to unlock the next possible rally is if Ethereum can breach the resistance of $3,400. According to a post on X from crypto trader Cas Abbé, dated Feb. 1, closing above the critical resistance on a daily chart would place it on course to rally to $4,000. Abbé believes Ethereum is forming a bullish divergence on its daily chart. This is the kind of price reversal signal, and if the price closes above $3,400, there will be a massive liquidation of short positions, pushing the price even higher.
Another interesting area is Ethereum’s options skew. As can be observed in the chart, traders and investors are more bullish now than they have been in some time. While analysts warn that optimism must be matched by actual blockchain developments and stronger adoption trends, it will likely take key improvements in its technology and ecosystem for Ethereum to redeem its previous highs.
Ethereum Way Forward: Increased Adoption

As Ethereum struggles at the resistance of $3,400, greater blockchain activity and adoption are crucial. Analysts say that to break the resistance and push Ethereum toward $4,000, it needs to increase its use cases and attract more developers, businesses, and institutional investors. If Ethereum expands its ecosystem and onboards more users, it will have a chance to outperform its competitors and solidify its position as the dominant layer-1 blockchain.
The other requirement for Ethereum is the need to constantly innovate and advance blockchain technology. One such aspect is enhancing scalability and minimizing gas fees. The latter two are the significant drawbacks that have kept users and developers from leveraging Ethereum to the full extent. A step in the right direction has been Ethereum 2.0, which helped the platform evolve, but improvement will not end there.
Will Ethereum Hit $4,000?
The future for the growth of Ethereum will rest heavily on such issues as further adoption, more technologies, and broadening of the blockchain network itself. Breaking out of this very important $3,400 level will help take Ethereum in its rally to approximately $4,000. Ethereal hope regarding the Ethereum options market with other potential partnerships to be inked with large and governmental partners remains strong on its bullish outlook. However, for Ethereum to maintain its position as a market leader, it needs to increase blockchain activity, offer new use cases, and continue to innovate in a competitive landscape.
FAQs
Why is Ethereum struggling to break the $3,400 resistance?
Ethereum is failing to break the resistance at $3,400 with a combination of factors such as insufficient blockchain activities, increased rivalry from other layer-1s, and even market sentiment. A sustained growth in adoption and new use cases could help push Ethereum through resistance.
What’s likely to create a rally up to $4,000 in Ethereum?
If the price breaks through the resistance level of $3,400, a rally toward $4,000 for Ethereum is possible. This could trigger a liquidation of short positions, pushing the price up. Increased adoption, improved blockchain activity, and institutional support can contribute to Ethereum’s growth.
How important is blockchain activity for Ethereum’s price recovery?
Blockchain activity is the most significant factor for the recovery of the price of Ethereum. Increased transaction volume, dApp development, and staking activity are healthy blockchain ecosystem signs. Ethereum has to improve its fundamental blockchain activity to stay in the game, as alternatives continue to grow.
What role does institutional adoption play in Ethereum’s growth?
Institutional adoption is what will make Ethereum grow. If partnerships from the private companies and government bodies, especially in the United States, happen, then Ethereum is to finally surpass those important resistance levels that have long been testing its strength as well as market adoption.
Can Ethereum manage to break through that $3,400 resistance soon?
Analysts believe that Ethereum will break through the resistance of $3,400 if it witnesses more intense blockchain activity, new use cases, and higher adoption. If Ethereum closes above this level on a daily chart, then it can potentially set the stage for a rally towards $4,000.

I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.