Ethereum Price Prediction: Stablecoin Reserves Hit New Record – Will ETH Finally Break $4,000?

Ethereum (ETH) has gone up by 54% in the past 30 days and currently stands at $3,767, making it the best-performing token in the top 5 during this period.

The combination of a significant improvement in market sentiment, the approval of pro-crypto legislation in the United States, and the successful implementation of the Pectra upgrade has contributed to ignite this significant rally.

Following a bullish breakout above $2,800, the price has been surging for days.

Data from DeFi Llama shows that stablecoin reserves have hit a new record at $132 billion. This is an indication that the Ethereum ecosystem has kept expanding and has probably attracted the lion’s share of the DeFi money that is flowing to the crypto ecosystem during this bull cycle.

Weekly DEX Volumes Have Surged Near $25 Billion Again

Trading volumes across Ethereum’s decentralized exchanges (primarily Uniswap) have also recovered in the past three weeks and are once again nearing the $25 billion mark.

Ethereum DEX Volumes and Stablecoin Reserves – Source: DeFi Llama

We can see that there has been a significant correlation between DEX volumes and ETH’s price in the past. The last three times that the price has reached these levels (near $4,000) have always brought with it DEX volumes exceeding $20 billion.

As ETH has rejected multiple times a move above $4,000 in the past three occasions, what we don’t want to see at this point is a strong downtrend in DEX volume as that could anticipate a big correction.

In contrast, breaking past the $25 billion barrier would be the ideal scenario that could push ETH above the $4,000 mark once again.

Trading volumes for ETH in the past 24 hours have increased by more than 35% as ETH hit an intraday high of $3,941. This means that selling pressure at these levels is mounting.

Key Support Levels to Watch as ETH Nears $4,000

Looking at the daily chart, we can see that both the 9-day and 21-day exponential moving averages (EMAs) are heavily stretched. The 9-day EMA currently sits 40% above the 200-day EMA while the 21-day EMA stands 29% above this same marker.

ETH/USD Daily Chart (Coinbase) – Source: TradingView

This is typically an indication that the market has gotten a bit ahead of itself and increases the risk of a pullback at this point.

Such a downward move would be more than healthy as it would raise the necessary liquidity for ETH’s next leg up – the one that could finally push it above $4,100 after 16 months. We can see that the price is on an uptrend already and the key support to watch at this point in case of a retreat would be the $3,500 level.

As long as the trend line support holds, this bull cycle may continue its upward path. Meanwhile, if the price action breaks below $3,500, the next support to watch would be the $2,800 area. This would be a natural retest of a key level that will not necessarily invalidate the uptrend.

However, if the price does head downwards with that kind of strength, it may take ETH much longer to climb back to these levels as the market will once again shown its reluctance to push the price above $4,000.

The Relative Strength Index (RSI) is at its highest point since March 2024. The last time this happened, a 30% correction followed. Hence, traders should keep an eye on how the price action behaves as ETH approaches this critical level.