TL;DR:
- Fundstrat’s Tom Lee notes that Ethereum has overcome eight 50% crashes since 2018, bouncing back strongly each time.
- ETH’s liquid supply is drastically shrinking, with over 30% of the total supply locked in staking processes.
- The market has suffered over $1 billion in liquidations, pushing the price toward the $1,890 support level.
Tom Lee, head of research at Fundstrat, is optimistic about the short-term future of Ethereum. The expert foresees an Ethereum recovery after 50% drops, arguing that this pattern of crash and rebound has repeated eight times since 2018.
Despite the recent volatility that saw the asset lose the $2,000 support level, the analyst maintains that these events do not represent a structural break. In fact, historical analysis suggests that rapid turnarounds often follow the market’s most severe capitulations.
However, current conditions present unique challenges, such as massive leverage liquidations exceeding one billion dollars. Therefore, some traders are closely watching the $1,890 level as the definitive floor before a new bullish momentum.
Supply Scarcity and the Impact of Staking
Staking demand remains solid even amidst the price drop, which has been a determining factor in this cycle. Currently, more than 36.7 million ETH are immobilized, representing approximately 30% of the total circulating supply.
This reduction in tradable supply can amplify price movements in both directions when volatility spikes. Additionally, there is a 21-day waiting list for new validators, demonstrating a long-term commitment from large investors.
In summary, although U.S. economic data and geopolitical tensions keep the market cautious, Fundstrat’s thesis is clear. Ethereum has proven to be a resilient asset that uses deep corrections as a springboard to reach new highs in every cycle.
