Top Reasons Why Ethereum Price May Rally Another 40% Soon

Key Insights:

• Ethereum price saw over 250,000 smart contracts deployed in one day, the highest level since the 2021 bull run.
• Over $2 billion in stablecoins flowed into Ethereum in seven days, leading all chains in net liquidity growth.
• ETH staking is at all-time highs while Layer 2 networks scale rapidly with billions locked in total value.
• Ethereum price formed a bull flag pattern with a breakout target at $4,000

Ethereum price is gaining momentum, based on data from several indicators. With more contracts and assets being deployed, traders are expecting a sudden price increase. The rise may result from increased activity on the chain and technical indicators suggesting bullish movements. Here are the top reasons why ETH price may rally 40%.

Smart Contract Deployments Could Impact Ethereum Price

Notably, analyst Ash Crypto pointed out that a whale purchased 30,000 ETH worth $75.6 million via OTC. The last time this entity made a similar acquisition, Ethereum price surged 40% within two weeks. Market analysts are now speculating whether this large-scale accumulation may trigger another strong rally in the current cycle.

According to Etherscan, Ethereum smart contracts recorded over 250,000 deployments within a day. Consequently, it demonstrated a major influx of new builders, just like what happened during the 2021 bull run.

An increase in decentralized protocols, automation tools, and token contracts introduced by developers leads to increased gas consumption and more activity on the blockchain.

Notably, Ethereum ecosystem often sees more productivity when there is a rise in new contracts being created. In the past, growth in deployment usually led to strong increases in crypto prices. This trend suggests that investors are growing more positive about Ethereum future in payment and development systems.

Stablecoin Liquidity Flows Back to Ethereum

More so, another reason for Ethereum price 40% rally is the rise of liquidity from stablecoin inflows. During the past week, over $2 billion of stablecoins, including USDT and USDC, were transferred onto Ethereum. This new influx of capital indicates that Ethereum is attracting more funds than other blockchains.

Arbitrum and Tron came next in inflows, but Ethereum still led as the preferred network for liquidity settlement. Buying a stablecoin is the first step for users before participating in DeFi activities, trading, or earning greater rewards. Having more stablecoins on Ethereum can boost trading and encourage more people to use its protocols.

Network Fundamentals Strengthened With Staking and Layer 2 Growth

Moreover, ETH staking has surpassed previous records, with a huge number of tokens being locked in the Ethereum proof-of-stake system. As more ETH is staked, there is less ETH available for short-term trading, demonstrating institutional holders’ trust in the network.

Additionally, there is rapid scaling happening on Layer 2 Ethereum networks, with billions of assets locked on Arbitrum, Optimism, and Base. With these L2s, Ethereum becomes more capable of handling transactions while keeping its independence and promise of settlement. A rising TVL indicates that more investors are taking advantage of L2-native dApps.

Technical Pattern Points to a $4,000 Ethereum Price Target

According to Trader Tardigrade, a bull flag is appearing on the Ethereum price daily chart and could send the price above $4,000. First, the price increases sharply, then consolidates within a channel between $2,750 resistance and $2,450 support. If the price closes beyond this range, it suggests that the pattern is in play and the trend may continue.

A bull flag setup is generally considered a sign of continuation. Once Ethereum price has a notable upward spike, like it did in early May, high volume during the breakout can indicate further price gains. The combination of this chart pattern with supporting bullish factors has indicated that ETH price may surge by 40%.

Meanwhile, recent analysis showed Ethereum price gained renewed investor interest despite bearish conditions. Accumulation by long-term holders increased, and ETF inflows topped $238 million this week.

Furthermore, a bullish flag and golden cross pattern suggested potential upside. If Ethereum breaks above $2,736, it may target $3,052. However, falling below $2,366 could trigger a move back to sub-$2,300 levels seen earlier in the cycle.

At the time of writing, Ethereum price was trading at $2,567, up 3% in 24 hours. The altcoin price showed a steady uptrend with strong volume, recovering from a low of $2,471 earlier in the session.