Ethereum Surging, Is The Rally To $4,000 Inevitable?

Ethereum is rallying when writing. The coin has broken above $3,500, with buyers not giving up on the gas pedal. In a bullish breakout formation, the uptrend remains and traders can look for entries to double down on dips.

Coin trackers show that ETH is up 3% in the last trading day, and roughly 15% in the past week of trading. At this pace, ETH has cemented its position as the second most valuable coin by market cap, trailing Bitcoin.

So far, ETH has a market cap of over $422 billion. However, it is likely that this will increase considering upcoming fundamental events in the next couple of weeks.

Going by market cap share, Ethereum commands 17.3%, ceding ground to Bitcoin that has been on a tear in recent days.

For optimistic ETH traders, they should watch the following:

Influx of capital into spot Bitcoin exchange-traded funds (ETFs): Presently, institutional investors have bought hundreds of thousands of BTC. Considering the direct correlation between BTC and ETH, and fact that ETH is the largest altcoin, capital will also likely flow the coin, lifting it in tandem. Data shows that institutions are not slowing down on spot Bitcoin ETFs, a net bullish for ETH.

The state of Decentralized Finance (DeFi) and total value locked (TVL): Ethereum hosts some of the top protocols, including Uniswap and Aave. As their TVL rises, the demand for ETH, as a settlement coin, will also balloon. Accordingly, ETH will benefit, powering the coin higher.

Ethereum Price Analysis

The path of least resistance remains to be upwards, looking at events in the daily chart.

ETH bulls are not slowing down, explaining the divergence in the Bollinger Bands (BB).

As ETH bull bars band along the upper BB, it shows that momentum is high. Surging upside momentum also sparks volatility, a benefit for day and swing traders.

Based on ETH/USD price action, $3,500 is an important psychological support level.  The uptrend will remain if this level is sustained as bulls reject lower lows.

If $3,500 is broken, ETH might fall to $3,000, especially if the rejection is with high trading volume. If not, sustained gains above $3,500 may lift the coin to $4,000.