Is Ethereum Entering a New Supercycle? Parallels With Bitcoin’s 2017 Rally

Ethereum is once again in the spotlight. Market analyst Tom Lee of Fundstrat believes that today’s ETH market increasingly resembles Bitcoin’s setup in 2017. Back then, BTC went through sharp drawdowns and deep scepticism before launching into a more than 100x rally that Lee describes as a “supercycle”.

Now, similar conditions may be forming for Ethereum. Despite a recent 35% pullback from around $4,946, some analysts argue this could be part of a broader accumulation phase rather than the end of the bull market. In this article, we will explore historical parallels with Bitcoin, whale behaviour, on-chain data, technical levels, and practical strategies for long-term investors who are trying to navigate this environment.

Historical Parallels Between Ethereum and Bitcoin’s 2017 Supercycle

Tom Lee, founder of research firm Fundstrat, recalls that his team first recommended Bitcoin in 2017, when it was trading around $1,000. During that cycle, BTC suffered repeated corrections of up to 60–75%, and sentiment frequently swung from euphoria to despair. Nevertheless, over time Bitcoin rallied more than 100-fold — the move Lee describes as a “supercycle”.

Today, he sees similar early-cycle conditions forming for Ethereum. From a local high near $4,946, ETH has already experienced a roughly 35% drawdown, leading many short-term traders to call for the end of the uptrend. However, Lee argues that such corrections can be part of a broader accumulation phase where strong hands gradually buy from weak ones who are not prepared for elevated volatility.

At the beginning of bull markets doubts are normal. Mixed signals, conflicting news, and stressful corrections often appear right before larger upside moves. History suggests that those who can tolerate drawdowns and avoid panic selling during peak fear are often the ones who benefit the most if a supercycle does unfold.

To understand whether Ethereum might be entering such a phase, it is essential to look beyond price alone and consider on-chain data, whale activity and the broader state of the network.

Ethereum Whales and Accumulation Trends in 2025

On-chain analytics from platforms such as CryptoQuant show that ETH is trading slightly above the average acquisition price of long-term holders. Historically, this type of zone is often associated with accumulation outweighing liquidation, as long-term investors use dips as opportunities to increase exposure.

In 2025, long-term Ethereum holders have been steadily increasing their balances. Around 17 million ETH have moved into so-called hoarding wallets — addresses that tend to hold assets with minimal spending. Total balances in such long-term wallets have climbed to about 27 million ETH, almost three times higher than at the start of the year.

The behaviour of large investors, or whales, is particularly notable. Wallets holding between 10,000 and 100,000 ETH have added roughly 7.6 million ETH since April, representing around a 52% increase. At the same time, smaller holders have been reducing their positions, locking in losses or rotating into stablecoins.

Historically, this type of divergence — where whales accumulate while retail reduces exposure — has often preceded recoveries and new uptrends. It does not guarantee future performance, but it is a key piece of context: large, sophisticated players typically do not increase risk in the middle of a terminal bear market without a long-term thesis.

Analysts also highlight price zones near $2,900 as attractive potential entry points for long-term strategies. Under this view, current weakness is not a signal that the Ethereum story is over, but rather a phase in which patient investors quietly build positions.

On-Chain Data and Network Activity on Ethereum

Ethereum’s value is not only determined by price charts, but also by its role as the underlying infrastructure for DeFi, NFTs and Web3 applications. That is why network data and gas metrics matter. In recent months, base-layer activity on Ethereum has declined and average gas fees have dropped to around 0.067 Gwei.

At first glance, lower fees and fewer on-chain transactions might look like falling demand. However, after the Dencun upgrade in 2024, the picture becomes more nuanced. Dencun dramatically reduced transaction costs, especially on layer-2 solutions (L2), where fees have dropped by nearly 99% compared to previous levels.

In practice, much of the user activity has shifted from Ethereum mainnet to L2 ecosystems such as Arbitrum, Optimism and Base. Users of DeFi protocols, games and NFT platforms increasingly rely on these cheaper and faster layers that still settle back to Ethereum. As a result, the base layer looks “quieter”, while the broader ecosystem continues to evolve and expand.

For investors, this means that mainnet gas and transaction counts no longer tell the whole story. Evaluating Ethereum’s long-term potential requires looking at L2 adoption, total value locked (TVL), and overall activity across the entire stack built on top of ETH.

Market Structure and Key Technical Levels for ETH

From a technical perspective, Ethereum is currently trading in a zone of heightened uncertainty. ETH is hovering near $3,195, down about 1.15% on the day, while daily trading volume is up almost 88%. Such combinations — rising volume with only a modest price move — often reflect a market squeeze in which liquidity builds as prices coil before a potential breakout.

At the moment, ETH remains below several important moving averages. The 30-day simple moving average (SMA) is situated near $3,664, and as long as price trades below this line, the short-term structure can be described as fragile. The 14-day Relative Strength Index (RSI14) is around 32.89, close to oversold territory where previous cycles have sometimes seen local reversals or relief rallies.

The MACD indicator is still printing bearish momentum, suggesting that sellers retain short-term control and that downside risk has not fully disappeared. For medium-term investors this is not necessarily a reason to capitulate, but it does underscore the possibility of further local lows before a sustained trend higher.

Traders are watching the $3,200 area as an important support zone. A convincing break and sustained trading below it would increase the odds of a deeper correction. At the same time, the 78.6% Fibonacci retracement level around $3,273 is being monitored as a potential region where a new bullish impulse could form if buyers regain control.

On the upside, a move and consolidation above roughly $3,400 is often mentioned as a sign that the recent downtrend may be losing steam. A breakout backed by rising volume and improving sentiment could open the door for a renewed advance and, potentially, the next leg of a larger uptrend.

Step-by-Step Strategy for Long-Term Ethereum Investors

If Ethereum is indeed in the early stages of a new supercycle, the key question for investors is how to position themselves without ignoring the substantial risks. Below is a step-by-step framework that can help structure decisions in a volatile environment.

Step 1: Define Your Time Horizon and Objectives

First, be honest about your goals: are you treating ETH as a short-term trade or as a multi-year investment? The supercycle narrative is fundamentally long-term. Your objectives — capital growth, diversification, participation in Web3, or inflation hedging — will shape position sizing, risk tolerance, and the type of strategies you adopt.

Step 2: Study Bitcoin’s 2017 Price History

Bitcoin’s 2017 cycle was not a straight line up. It included multiple 60–75% drawdowns, periods of intense fear and waves of media scepticism. Studying that history — price charts, news flow, and sentiment — helps set realistic expectations about what a supercycle looks like in real time and why it feels uncomfortable even for believers.

Step 3: Track On-Chain Metrics and Whale Activity

On-chain data about long-term holders and whales provides context that price alone cannot. Metrics such as the average price of long-term holders, the amount of ETH sitting in “hoarding” wallets, and the behaviour of addresses holding 10,000–100,000 ETH can reveal whether strong hands are accumulating or distributing.

Step 4: Build a Plan Around Levels, Not Emotions

Rather than reacting emotionally to every move, pre-define your key zones: areas where you would be comfortable buying (for example, near deeper dips towards $2,900), regions where you would reconsider your thesis, and price ranges where you would trim or rebalance if ETH rallies strongly. A rule-based approach helps transform volatility from a source of panic into a strategic tool.

Step 5: Use Staggered Entries and Dollar-Cost Averaging

Trying to pick the exact bottom or top is rarely realistic. Many long-term investors prefer staggered entries: they split capital into several tranches and deploy it over time or at predefined levels. This approach is particularly useful during volatile accumulation phases, when the market can swing sharply in both directions while the broader trend slowly develops.

Step 6: Combine ETH With Stablecoins for Flexibility

Pairing ETH positions with stablecoins such as USDT is a common way to manage risk and liquidity. During uncertain phases, a portion of your portfolio can stay in stablecoins, ready to be rotated into ETH when prices become more attractive. Conversely, after strong rallies, you can gradually move part of your gains back into stablecoins to lock in profits.

Step 7: Monitor L2 Growth and Ecosystem Fundamentals

Ethereum’s long-term story is tied to the expansion of its ecosystem: DeFi platforms, NFT marketplaces, gaming projects and social applications running on both L1 and L2. Tracking metrics such as TVL, user activity and the pace of innovation across major layer-2 networks helps you evaluate whether the underlying fundamentals are keeping pace with the market narrative.

Risks, Safety Considerations and Common Mistakes

Even if a supercycle scenario plays out, Ethereum remains a high-risk asset. Crypto markets can move violently in both directions, and historical performance is not a guarantee of future returns. Poor risk management can lead to large losses, even in an environment where the long-term trend is up.

Common pitfalls inсlude:

• Buying near local peaks due to FOMO and then panic-selling during the first sharp correction.
• Taking on excessive leverage: margin and derivatives can turn a normal pullback into a liquidation event.
• Ignoring basic security practices, such as using insecure wallets, keeping large sums on exchanges, or failing to back up seed phrases.
• Blindly copying signals or social media calls without understanding the strategy, risk profile or time horizon behind them.

Infrastructure choices also matter. For long-term storage, many prefer non-custodial and hardware wallets. For active DeFi use, due diligence is essential: review audits, assess protocol reputations, and pay attention to smart-contract risks.

It is also wise to periodically revisit your investment thesis. If fundamentals change — for example, if Ethereum’s competitive position deteriorates, regulatory pressure intensifies, or key ecosystem metrics trend down for a prolonged period — your strategy may need to adapt accordingly.

FAQ: Ethereum and the Supercycle Narrative

Conclusion: What Could Be Next for Ethereum?

Ethereum appears to be in a transitional phase. On the one hand, price action is choppy, technical indicators are mixed and short-term sentiment is cautious. On the other hand, long-term holders and whales are adding to their positions, the ecosystem continues to evolve after the Dencun upgrade, and historical parallels with Bitcoin’s 2017 cycle are hard to ignore.

If a new supercycle does emerge, the largest benefits will likely accrue to those who combine patience, risk management, and a clear understanding of their own objectives. Short-term volatility, sharp pullbacks and conflicting narratives are part of the process, not anomalies. Studying Bitcoin’s past supercycle provides a useful lens through which to view Ethereum — but each investor must still make their own assessment and decide how much risk they are willing to take.

Disclaimer: This content is provided for informational and educational purposes only and does not constitute financial, investment or legal advice. Any decisions related to the purchase, sale or holding of cryptocurrencies and other digital assets are made solely at your own discretion and risk.