On Christmas Eve 2025, the cryptocurrency market did not experience the anticipated "Santa Claus rally." Ethereum (ETH) was priced at around $2,898, still about 40% away from its all-time high of $4,878. While Wall Street is betting on the policy benefits of the Trump administration's second year, on-chain and funding data reveal a completely different message. Analyst Ben Cowen stated bluntly on the Bankless Podcast on December 23 that if Ethereum reaches its previous high in 2026, it might be a "retreat" signal rather than the start of a new bull market.
Bull Market Trap: Risk of a Double Top at $4,878
Cowen's model shows that once Ethereum returns to $4,878 driven by speculative sentiment, a large Double Top pattern will emerge on the technical charts. Similar patterns have often been accompanied by rapid sell-offs, potentially leading to a 50% drop as the price retests the $2,000 level. Cowen cautions that if Bitcoin continues its bearish downtrend during the same period, Ethereum will find it difficult to rally independently. He states:
"If Bitcoin is indeed in a bear market and instead of experiencing a traditional bubble burst at the top, it is slowly declining, then Ethereum will find it difficult to surge on its own."
Veteran trader Peter Brandt echoed these concerns, suggesting that Bitcoin could dip to $60,000 in the third quarter of 2026, setting a ceiling for the overall market.
The Trump administration's friendly stance towards the crypto industry hasn't yielded immediate results from monetary policy. Cowen points out that without a significant expansion of the Federal Reserve's balance sheet, the macroeconomic environment remains "restrictive." This is evident in fund flows: in November 2025, Ethereum spot ETFs saw a net outflow of $1.42 billion, indicating that traditional institutions chose to hedge rather than increase their positions at the year-end. The lack of loose monetary support is a key factor suppressing market activity.
Fundamentals may not be able to counteract macro headwinds.
Even so, some institutions and tech enthusiasts remain optimistic about Ethereum's long-term fundamentals. Bitwise analyst Matt Hougan believes that regulatory benefits such as the Clarity Act are expected to unleash pent-up institutional demand in 2026, potentially leading to ETF purchases exceeding daily issuance. On-chain data also shows that institutions like BitMine have been accumulating Ethereum in the second half of 2025, and future hard forks to Glamsterdam and Hegota could improve network performance. However, Cowen emphasizes that in the context of insufficient liquidity, these positive factors may seem weak and unlikely to reverse the overall environment.
2026: A Defense-First Investment Mindset
Cowen broadens his perspective to the entire ecosystem, pointing out that most Altcoin have "ended" their cycle, with momentum clearly waning. As Ethereum's price continues to hover below the $3,000 mark, technical indicators show weakness. He believes 2026 will be a year of "defense is king," and any attempt to break through all-time highs should be seen as a profit-taking opportunity, not a call to chase the rally. Investors need to be wary of FOMO and calmly assess risks to preserve their capital in a potential bull market trap.
A sober reflection on Christmas Eve serves as a reminder to the market that the apparent optimism may not mask the underlying liquidity crunch and technical pressures. If Ethereum does indeed approach $4,878 in 2026, exiting at the peak might be a wiser move than chasing the price recklessly.
