Ethereum at a Crossroads: Overbought & Overcrowded—Will ETH Finally Cool Off in 2025?

Ethereum's bull run hits a wall as traders pile in—classic FOMO meets overleveraged DeFi degens.

Is this the pullback before the next leg up, or the start of a deeper correction?

Technical indicators scream overbought while gas fees spike—retail's late to the party again.

Smart money's already rotating into layer-2 solutions (where the yields actually make sense).

One thing's certain: Wall Street's 'crypto analysts' will claim they predicted the outcome—whichever way it goes.

Key Takeaways

Ethereum is riding high with a 46.62% Q3 ROI, but with RSI overheated and over 95% of supply in profit, signs of exhaustion are flashing, hinting at a potential pullback before $4k is in play.

Ethereum [ETH] is ripping through Q3 with a 46.62% ROI so far, already outpacing the last two quarters, with price hovering around $3,640 at press time.

Notably, the last time ethereum saw a monthly move this aggressive was in November, when it rallied 47.21% and tapped a local high near $3,740. 

But that explosive move triggered a brutal Q1 drawdown. ETH retraced over 50% of its gains, while Bitcoin [BTC] held up relatively well, dipping just 10%, as BTC dominance ripped past 62% for the first time since 2021.

Source: Coinglass

In simple terms, Bitcoin and Ethereum have been trading out of phase, and the charts reflect that too. 

BTC dominance RSI has dropped into extremely oversold territory, while ETH’s daily RSI remains overheated, reinforcing the sharp divergence between ETH’s 46% monthly run and BTC’s modest 9.96% climb.

However, with BTC.D now approaching the key 60% support zone, the setup looks ripe for a rotation. If dominance catches a bounce, could we see capital FLOW back into BTC, putting ETH at risk of a Q1-style pullback?

Ethereum in the driver’s seat, but for how long?

Beyond the overheated ROI and stretched momentum, Ethereum’s % supply in profit adds another LAYER to the setup. 

With ETH pushing toward $3.7k, over 95% of the supply is now in the green, entering a historically saturated zone that’s typically marked by distribution.

We’ve seen this play out before.

Similar spikes into the 95–100% range (highlighted by the red band), particularly in late December 2024 and early January 2025, lined up with ETH’s sharp Q1 reversal, as profit-taking pressure kicked in.

Source: Glassnode

However, it looks like smart money might be getting ahead of that risk.

Lookonchain tracked two fresh whale wallets, scooping up 58,268 ETH at an average cost basis of $3,680, roughly $212 million in size. That adds to the $18 billion+ in large transfers flowing through the Ethereum network.

But is that enough to lock in a bottom? Not just yet. ETH’s approaching a key inflection zone, and if past cycles are anything to go by, a shakeout or reset could be on the cards before $4k becomes a clean target again.