Ethereum's Decline in 2025: Key Factors Behind the Falling Price

Ethereum (ETH) as the second largest cryptocurrency by market value, experienced dramatic price fluctuations in 2025, triggering wide attention from investors and blockchain enthusiasts: “Why did Ethereum fall?” From macroeconomic pressures to on-chain data changes, multiple factors have collectively led toEther pricefall. This article will analyze in depth Ethereum price The main reasons for the fall, to provide insights to investors, and to explore possible rebound signals, to help you better understand this market dynamics.

Ethereum recent price fall overview

As of May 2025, the price of Ethereum fell from its peak of $4100 in December 2024 to around $1400, a drop of over 60%. This sharp decline led to its market capitalization shrinking to approximately $178 billion. While volatility is common in the cryptocurrency market, the continuous decline of Ethereum has sparked widespread discussions. Here are the key factors leading to its price decline.

The main reason for the fall of Ethereum

1. Macro-economic pressure and trade tensions

The increasing global economic uncertainty, especially the radical tariff policy implemented by US President Donald Trump in early 2025, has caused shockwaves in the market. Threats of tariffs on Canada, Mexico, and China have triggered concerns about trade wars and economic recession in the US. Cryptocurrencies, as high-risk assets, often perform poorly in such a “safe haven” environment, with investors turning to gold (up 19% to $3115 in 2025) and the US dollar. Ethereum has been particularly hard hit due to its association with growth narratives such as DeFi and NFTs.

2. Large-scale liquidation and whale selling

Large-scale liquidation has exacerbated the price pressure on Ethereum. On-chain data shows that in February 2025, the supply of Ethereum on centralized exchanges reached a 12-month high of 16.2 million ETH, indicating that whales (large holders) were selling off. In addition, in March 2025, leveraged long positions liquidated in a single day amounted to as high as $168 million. These liquidations triggered a chain reaction, forcing traders to sell at lower prices, further pushing the price down.

3. Network activity declines and competition intensifies

In early 2025, Ethereum’s trading volume fell by 40.5%, far exceeding competitors Solana (-30%) and Avalanche (-23%). This trend reflects a weakening demand for core use cases such as DeFi and NFTs. Meanwhile, faster and lower-cost blockchains like Solana are capturing market share, attracting users and developers. Although Ethereum’s Layer-2 (L2) solutions have improved scalability, the reduction in mainnet transaction fees has weakened the attractiveness of ETH as a “sound money.”

Will Ethereum bounce back?

Despite the current fall, the following factors provide hope for the potential rebound of Ethereum:

• Exchange reserves decrease: CryptoQuant data shows that the amount of ETH held by exchanges has decreased, indicating that users tend to self-custody, and selling pressure may weaken.

• Network upgrade: EIP-7781 and the upcoming Pectra upgrade will improve network performance and restore the deflation mechanism, potentially boosting market sentiment.

• Long-term institutional interest: Analysts predict that if the macro environment improves, ETH could rebound to $7000 by the end of 2025.

• Oversold signal: RSI is in oversold territory, and some investors consider the current price as a buying opportunity for long-term investment.

However, to sustain the rebound, Ether needs to break through key resistance levels such as $2800 and respond to global economic uncertainties. Investors should closely monitor tariff policies and Bitcoin price Trend, as ETH usually follows the trend of BTC.

Conclusion

The answer to the question of ‘Why is Ethereum falling?’ involves multiple factors such as macroeconomic pressures, liquidation events, decreased network activity, technical bearishness, weakened institutional demand, and concerns about inflationary supply. Despite facing challenges in 2025, Ethereum’s robust ecosystem and upcoming upgrades provide hope for a rebound. Currently, investors need to act cautiously and closely monitor global markets and on-chain data.

Want to learn more? Visit etherscan.io to view on-chain data for the Ethereum network, or get real-time ETH price dynamics via Gate.io. Stay informed, invest rationally, and seize the opportunities in the crypto market!

Disclaimer: This article is for information purposes only and does not constitute investment advice. Cryptocurrency investment carries high risks, please make decisions cautiously and consult with a professional financial advisor.