The price of Ethereum has recently seen an impressive rally, leading the altcoin market with a significant 13% increase over the past week. This growth has brought the cryptocurrency close to its all-time high and sparked a new wave of optimistic predictions.
Market analyst Mags, active on the social media platform X (formerly Twitter), pointed out a crucial milestone for the price of Ethereum: after 1.146 days of price consolidation, the second-largest cryptocurrency has finally broken through the important $4.000 barrier.
Historically, Ethereum has attempted to cross this threshold three times, encountering obstacles each time. However, in August, the fourth attempt was successful, and since then, the token has been able to consolidate above the $4.000 level for several months.
While there was a brief dip to $3.800, optimism quickly returned, propelling the Ethereum price back above $4.000 and creating a powerful V-shaped recovery. According to the analyst, this technical pattern indicates strong bullish sentiment surrounding the leading altcoin, with Mags suggesting the next increase could lead to ETH hitting a record high of $7.331, in line with the 1.618 Fibonacci extension.
Macroeconomic factors also play a significant role in Ethereum's continued profit potential. Analysts at CryptoQuant note that the US M2 monetary supply has entered a new expansion phase, reaching a record high of approximately $22,2 trillion.
Bitcoin (BTC) was the first to reflect this increase, with a rise of over 130% since 2022, showing a strong correlation with M2 money supply growth of around 0.9. In contrast, Ethereum’s price performance has lagged behind, rising by only around 15% over the same period, a phenomenon analysts refer to as “liquidity lag.”
However, on-chain data collected by CryptoQuant suggests this gap may be closing. Notably, exchange reserves of Ethereum have fallen to around 16,1 million ETH, which represents a drop of over 25% since 2022.
These figures indicate a structural decrease in selling pressure, as net flows to exchanges remain consistently negative, indicating that ETH is being withdrawn for self-custody. Furthermore, the Coinbase Premium Index has turned positive, signaling renewed interest from US institutional investors.
In previous cycles, the Ethereum price has often lagged Bitcoin in the initial stages of monetary easing. However, when Bitcoin's dominance falls below 60%, capital is often shifted into the altcoin market, leading to a rise in the ETH/BTC ratio. Analysts at CryptoQuant note that this pattern appears to be reoccurring, suggesting that the remainder of the year could see a shift from a Bitcoin-driven market to one driven by Ethereum and other altcoins.
If global liquidity continues to increase and the trend of outflows from exchanges continues, Ethereum's price could move closer to M2 growth, potentially triggering a new phase of revaluation. In such a scenario, the likelihood of ETH approaching $10.000 increases, analysts say.
What are the key factors behind Ethereum's recent rise?
The combination of technical breakthroughs, such as the strengthening above $4.000, and macroeconomic changes such as the increase in M2 money supply, have contributed to the positive sentiment around Ethereum.
Why has Ethereum benefited relatively less from recent market dynamics compared to Bitcoin?
Ethereum is suffering from a 'liquidity gap', meaning it is not benefiting equally from money supply expansions, but there is some evidence that this gap is closing.
What can we expect for the future of Ethereum?
If current trends continue, and interest from institutional investors increases, we can expect a significant increase in the Ethereum price, possibly even towards $10.000.