Summary
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Fundstrat analyst Sean Farrell suggests Ethereum (ETH) is staging a significant comeback after being a “forgotten” blue chip, with its recent price strength appearing more organic and rooted in market structure rather than specific hype.
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A potential “cultural and strategic shift” at the Ethereum Foundation towards L1 scalability, coupled with diminishing short interest and returning institutional flows, could further bolster ETH’s recovery and user experience.
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Farrell is watching the ETH/BTC 100-day moving average, suggesting a near-term ETH price of $3,100 if Bitcoin remains flat, with higher targets if Bitcoin rallies, and noting ETH’s price moves often anchor valuations for other L1s like Solana.
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Ethereum’s recent performance aligns with a broader shift in crypto risk appetite, similar to trends observed in small-cap stocks, indicating that after a long period, ETH might now be leading market optimism.
Sean Farrell of Fundstrat, an analyst with a strong track record in cryptocurrency market predictions, posits that Ethereum (ETH) is currently recovering significantly.
For a considerable period spanning roughly two years, Ethereum has often been a less prominent blue-chip asset within cryptocurrency portfolios.
Challenges in its narrative, the diversion of network activity to Layer-2 solutions, and substantial short interest contributed to a perception of Ethereum as an unattractive investment.
Emerging Signs of an Ethereum Turnaround
However, there are emerging indications that Ethereum’s market position may be improving.
Sean Farrell, who serves as Fundstrat’s Head of Digital Asset Strategy, believes this positive trend has the potential for continuation.
“We’ve been pretty sour on ETH for the better part of the past couple of years,” Farrell conveyed to Coinage.
“But in early May, we started to see that ETH/BTC pair trade sideways in a pretty tight range.”
Organic Rally and Shifting Market Dynamics
It was this demonstration of relative strength, particularly in the absence of any significant ETF-related speculation or major market catalysts, that captured Farrell’s attention.
He described the recent upward movement in ETH’s price as “pretty organic” and an “instance of price discovery.”
The self-driven nature of this rally is a key distinguishing factor from previous, less sustained, uptrends in the ETH/BTC trading pair.
While Farrell observed that prior Ethereum rallies were often linked to specific catalysts such as ETF speculation, the current positive momentum appears to be more deeply rooted in market structure and fundamental factors, especially capital flow dynamics.
Price Targets and Market Correlations
From a valuation standpoint, Farrell is closely monitoring the 100-day moving average of the ETH/BTC pair.
He has suggested that, assuming other market conditions remain constant and Bitcoin’s price stabilizes around $104,000, Ethereum could reach a near-term valuation of $3,100.
Furthermore, if Bitcoin experiences a rally, as Fundstrat anticipates, “that price target increases.”
Thus far, Ethereum’s breakout seems to align with a broader change in risk appetite within the cryptocurrency market.
Farrell also identified this trend by observing the performance of small-cap stocks.
“If you look at the ETH/BTC pair, it’s followed that small-cap S&P 500 relative pair pretty closely over the past couple of years,” he noted.
“And small caps bottomed around April 14th.”
He pointed out that both metrics continued their parallel movement and experienced a coordinated retreat on Monday morning.
Impact on Other Layer-1 Blockchains and Diminishing Headwinds
Nevertheless, Farrell emphasized how Ethereum’s price movements serve as an anchor for the valuations of other Layer-1 blockchains, with Solana being a prime example.
“All of these L1s are priced off of each other,” he explained.
“If ETH rallies, that increases the near-term upside for Solana.”
This is particularly noteworthy as new buyers enter the Ethereum market and existing short interest diminishes.
“ETH has also been heavily shorted,” Farrell added.
“That’s been a structural headwind.”
With short positions being covered, a return of institutional investment flows, and Ethereum’s fundamental indicators beginning to align with its price action, Farrell foresees further potential for growth.
“I do think there is reason to be a little more optimistic,” he concluded. For the first time in an extended period, Ethereum might be spearheading this renewed market optimism.
Also Read: Ethereum Looking Ready To Break Out From 4-Year Consolidation, Analyst Says Price Will “Go Insane”
*Disclaimer*: We at Bitcoinleef.com present you with the latest information in the crypto market. However, this information should not be regarded as financial advice and viewers should consult their financial advisors before investing.
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