• Ethereum price continues to consolidate as it prepares to breach $4,000 and climb higher.
  • ETH layer two and adoption continue to progress in the right direction after the recent London hard fork.
  • A retest of the all-time high at $4,372 is plausible if ETH bulls remain optimistic.

Ethereum price is coiling up after tagging a crucial psychological level. Investors can expect ETH to shoot higher as the overall outlook of the cryptocurrency market remains optimistic. In a highly bullish case, the smart contract token will likely set up a new all-time high.

Adoption and post-hard fork developments

From shifting the algorithm to Proof-of-Stake (PoS) via the recently introduced London hard fork to having multiple solutions to its scalability issues, Ethereum has come a long way. Arbitrum, a layer-two scaling solution from Offchain Labs, recently announced that it had secured funding worth $120 million in a Series B round.

This raise was led by Lightspeed Venture Partners and others like Pantera Capital, Alameda Research, billionaire Mark Cuban and Polychain capital.

The announcement added,

Offchain Labs built its platform in response to an increasing need for scaling Ethereum without compromising on the security of Ethereum as the base layer. 

More importantly, Arbitrum has EVM compatibility, allowing developers and projects to deploy without changing the code in their contracts.

On a similar note, Polygon adoption is pushing to new heights with the recent integration of Dharma, which is inadvertently helping ETH scale. 

While layer-two solutions are becoming more efficient, Ethereum’s shift to proof-of-stake and the London hard fork are active efforts to further improve the scalability of the ETH blockchain without compromising its security and decentralization.

The recent protocol upgrade and the significant strides that the Ethereum Foundation is making aim to improve the scalability of the entire blockchain by retaining its security and decentralization. Although this is a bullish development in the long run, it will take ETH a while to feel the effects of deflation.

While it will take time, ETH is already retesting, hovering below the $4,000 level in attempts to breach it. So far, roughly $834 million worth of ETH has been burnt. As this process continues, Ethereum price will face a supply shock, pushing Ethereum price higher.

Although the smart contract token comes close to the $4,000 psychological level, retail investors show no real interest as gas prices hover around 102 GWEI.

Ethereum price faces temporary slowdown

Ethereum price broke out of its month-long consolidation above the $3,000 level on August 31. Since this breakout, ETH has rallied nearly 25% and is currently restarting another phase of congestion.

As this sideways movement consolidates, volatility and buying pressure continue to increase. Investors can expect a sudden burst in bullish momentum that pushes Ethereum price to $4,071. A decisive close above this resistance level will open the path for a retest of the all-time high at $4,372.

If the bullish momentum persists, market participants can expect ETH to set up a new all-time high at $4,700. In some extreme cases, ETH might also tag the $5,000 psychological level.

ETH/USDT 1-day chart

ETH/USDT 1-day chart

Supporting this ascent and a new all-time high is IntoTheBlock’s Global In/Out of the Money (GIOM) model, which shows little to no resistance present in ETH’s way.

Roughly 1.16 million addresses that purchased 1.74 million ETH at an average price of $3,909 are also in the clear as ETH is attempting to breach $4,000.

ETH GIOM chart

ETH GIOM chart

Additionally, the supply on exchanges has been on a drastic decline over the past two weeks. From August 23 to September 5, roughly 2.35% of ETH has left centralized exchange wallets, signaling a bullish outlook.

ETH supply on exchanges chart

ETH supply on exchanges chart

Interestingly, despite the recent uptick in price, the ETH funding rate is hovering around 0.07%. A high funding rate is often the sign of an overleveraged market, which could exacerbate potential sell-offs. 

The current funding rates suggest that the retail investors are taking it slow, which is a sign of a healthy uptrend and does not forecast any sudden crashes.

ETH funding rate chart

ETH funding rate chart

Things are looking optimistic for Ethereum price and show no signs of slowing down. A decisive close above $4,372 will undoubtedly open a resistance-free path for ETH and propel it higher.

On the other hand, even a 15% correction to $3,345 would not put ETH in harm’s way. Still, a lower low below $3,223 will plant the seeds of doubt and probably scare off weak investors. 

If the selling pressure pushes Ethereum to shatter the August 26 swing low at $3,027, it will invalidate the bullish thesis. In such a case, market participants can expect Ether to explore lower territory.

 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections

Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections

MAGA trades slightly down to around $3.4 on Tuesday after rallying more than 20% since Sunday. The former President Donald Trump-based memecoin is poised for further gains as daily active addresses and network growth metrics rise, signaling increased network usage and adoption.

More Meme Coins News
Bitcoin ETFs beat Gold ETFs with 65% gain since launch

Bitcoin ETFs beat Gold ETFs with 65% gain since launch

Bitcoin ETFs have reshaped the digital asset investment landscape since their approval in January. Their total assets under management climbed over $70 billion during the weekend, placing them ahead of other investment products, including gold.

More Bitcoin News
XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand

XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand

Ripple's XRP is trading at $0.5050 up slightly by 0.2% in the past 24 hours as it struggles to sustain a move above a key symmetry triangle resistance. Meanwhile, in its recently released Q3 report, Ripple noted the rising listing and relisting of XRP across crypto exchanges and global platforms.

More Ripple News
Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF

Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF

Ethereum is trading near $2,420, down about 1% on Monday, but could bounce off a key descending trendline close to the $2,258 historically high demand zone. Meanwhile, the State of Michigan pension fund revealed an investment of $11 million in ETH exchange-traded funds.

More Ethereum News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP