ETH price forms bullish pattern amid soaring network activity and renewed investor confidence
Ethereum (ETH) is showing strong bullish momentum as it forms a classic technical pattern on the daily chart, signalling a potential price rally towards the $4,000 mark. With transaction fees hitting a three-month high and total value locked (TVL) on the rise, on-chain data suggests a growing investor interest in the second-largest cryptocurrency by market capitalisation.
Bull Flag Pattern Signals 56% Upside
Ether has formed a “bull flag” pattern on the daily chart, a setup known for signalling upward momentum following a period of consolidation. This formation emerged after a sharp price increase from $1,750 on 6 May to $2,734 on 23 May, marking a 56% rise. The breakout above the upper trendline of this flag at $2,550 suggests the potential for further gains, with a projected target just under $4,000 if the pattern plays out.
According to crypto analyst Michael van de Poppe, maintaining support above $2,400 is key. He suggests that if ETH holds this level, it could continue its ascent towards $3,500 and potentially beyond.
Network Activity and Fees Reach New Highs
Ethereum’s network activity has surged in recent weeks, adding weight to the bullish technical outlook. Daily transaction counts have jumped by 37% over the last month, levels last observed in January 2024, when optimism around the approval of US spot Bitcoin ETFs pushed ETH above $4,000.
In parallel, Ethereum’s average transaction fees soared to 0.0005 ETH ($1.33) on 22 May, the highest in 90 days. Such spikes in transaction costs are typically associated with increased user activity, particularly across decentralised finance (DeFi), NFTs, and other decentralised applications (DApps).
Historically, ETH prices have moved sharply higher during similar high-usage periods. For instance, during the 2021 DeFi boom, fees surged to as much as 0.015 ETH, indicating overwhelming demand and bullish sentiment.
Total Value Locked Surges 44%
The bullish narrative is further supported by a significant increase in the total value locked on Ethereum’s smart contracts. As of 23 May, Ethereum’s TVL stood at $65.3 billion — a 44% rise from $45.26 billion recorded on 22 April.
Key contributors to this growth include a 51% increase in deposits on the tokenisation protocol Pendle, and substantial gains on Ether.fi and EigenLayer, which grew by 48%. Ethereum maintains its dominance in the smart contract ecosystem, commanding a 54% share of total TVL among layer-1 chains. In contrast, Solana and BNB Chain hold just 8% and 5%, respectively.
Spot Ether ETFs Add to Bullish Pressure
Institutional interest in Ethereum has also grown. Between 13 and 22 May, US-listed spot Ether ETFs attracted $249 million in net inflows. These investments provide a fresh demand-side boost for ETH, indicating renewed confidence among large-scale investors.
Combined with retail user activity and expanding use cases in the DeFi space, these inflows could provide the fuel needed for Ethereum’s continued rally towards the $4,000 threshold.
Price Outlook: $3,600 in Near Term?
While the ultimate bullish target lies at $4,000, some analysts see Ethereum hitting $3,600 in the near term if current support levels remain intact. The broader crypto market’s recovery, led by Bitcoin’s climb to all-time highs and a more favourable macroeconomic outlook, has also contributed to ETH’s recent performance.
If Ethereum sustains current momentum, bolstered by high network activity, rising transaction fees, and increasing TVL, a continuation of its uptrend seems likely. However, a breakdown below the $2,400 support could invalidate the bullish setup and lead to a short-term correction.
For now, all eyes remain on Ethereum’s next move as technical, on-chain, and institutional factors align in its favour.
