$ETH is primed for a breakout: post‑Merge deflation + rising ETF inflows meet a textbook Wave 4 dip (~$2.1–2.5k), setting up a 1.618 impulse to $5.8k+. Position now, or watch from the sidelines. Here is how you do it …
The Big Picture
Ethereum is the foundation for DeFi, stablecoins, and countless protocols. Its value is driven by usage and the burn mechanism (EIP‑1559), making ETH a productive, potentially deflationary digital commodity.
Why it matters now? ETH has evolved post‑Merge and Shanghai:
Staked ETH: ~27–30% of supply is staked, yielding ~3–4% in ETH terms.
Burn Rate: ~0.5–1.5 million ETH burned per year (depending on activity), making ETH net deflationary in bullish conditions.
Active Addresses: ~450–500k daily active addresses, down from peaks but still robust.
Market Context: ETH dominance is ~16–18% of total crypto market cap. Its role as a global settlement layer positions it uniquely versus alternatives like Solana or Avax. Growing institutional adoption (spot ETFs, DeFi platforms like Aave, Uniswap) strengthens its long‑term case.
Technical Framework
Weekly
– ETH is working through a multi‑year Wave 4 correction post‑2021 highs (~$4,878), finding a higher‑low base at ~$1,385.
– Now progressing into Wave 5, long‑term Fibonacci extension targets point towards $5,786, $8,506, and $12,907.
– RSI reset to neutral zone, MACD curling higher suggests trend resumption in H2 2025–H1 2026.
Daily
– Strong breakout from the $1,900–$2,200 range confirms a higher‑high trend aligned with Wave 3 of the larger degree.
– Retracements have held the 0.382–0.5 Fibonacci zones (~$2,130–$2,300), making these critical support levels.
– Targets for trend continuation: $3,238 ➔ $3,730 ➔ $4,227.
Lower Timeframes (4H, 1H, 30m)
– Current structure appears to be a Wave A low at ~$2,113, with an ongoing corrective move.
– RSI across lower timeframes is neutral (~45–55), suggesting an accumulation range.
– Resistance to clear for bullish reversal: $2,540–$2,600 range (structural pivot).
Risk/Reward Framework
Why Here?
– ETH is in its long‑term value zone ($2,100–$2,500), making risk/reward favorable for long‑term exposure.
– Inflation dynamics (net deflation at ~15–30 Gwei gas) and institutional adoption (ETF approvals) remain strong tailwinds.
– Technical structure confirms this zone as Wave 3–5 accumulation area.
Invalidation
– A weekly close below $1,900–$2,000 invalidates the bullish Wave 3–5 setup.
Actionable Plan
– Accumulate: $2,100–$2,500 range.
– First Targets: $3,200, $3,730, $4,227.
– Long‑Term Targets: $5,786 ➔ $8,506 ➔ $12,907 (Wave 5 Fibonacci extension clusters).
– Maintain trailing stops and reevaluate as price approaches $3,200–$3,700 range.
Final Thoughts
ETH remains the best‑positioned smart contract platform for the next market cycle. Its deflationary dynamics, deep developer activity, and role as a global trust layer justify long‑term exposure. The charts point to a higher‑degree Wave 5 trend aligning with fundamental tailwinds (ETF approvals, institutional adoption).
At the same time, it’s critical to remember that crypto is a highly volatile, speculative market. It can boom or bust quickly, and allocations must be sized accordingly. Never bet the whole portfolio; position ETH as one part of a diversified allocation, ensuring sound risk management and long‑term resilience.
