Ethereum Hits Multi-Year High, Reclaims $4,200 — First Time Since 2021

Ethereum has become the talk of the market, gaining over 45% in just one month, reclaiming the 2021 levels. After struggling to hold above $4,000 for years, the world's second-largest cryptocurrency has finally given a breakout, now trading around $4,300. This rally reflects deeper structural shifts in adoption, utility, and investor behavior that set it apart from previous cycles. As per Mr Edul Patel, Co-founder and CEO of Mudrex, a leading Indian crypto exchange, let's take a look at what's driving this rally and how it could impact the broader market.

Institutional Capital Flowing into ETH

One of the most evident factors of this rally is the depth of institutional participation. Since July, spot Ethereum ETFs have seen over $6.64 billion in net inflows over 19 consecutive positive days, creating sustained buy-side pressure.

We have also seen corporate treasuries diversifying, with $824 million worth of ETH purchases in Q3 so far, signaling a broader acceptance of Ethereum's programmable money capabilities.

Network Utility is Driving Economic Activity

Ethereum's fundamentals are equally gaining strength. A 50% gas limit increase since March has reduced transaction costs, bringing stablecoin transfers below $1, which are critical for mainstream DeFi adoption. These improvements have led to an all-time high in user activity and new wallet addresses on the network.

Layer 2 networks now process 11-12 times more transactions than other networks, such as mainnet, with Arbitrum, Optimism, and Base collectively holding over $18 billion in TVL. Ethereum currently has about $91.14 billion locked in DeFi, and these protocols burn more ETH than any other use case.

Potential Supply Squeeze

The supply side of Ethereum is creating strong upward pressure on prices. Currently, 33.8-37 million ETH, which is roughly 27-30% of the total supply, is staked. This means that a large portion of ETH's supply is locked up to secure the network and earn rewards, reducing the amount available for trading.

Adding to the squeeze, exchange reserves for ETH are at multi-year lows. With this, fewer tokens are sitting on trading platforms, and most holders are keeping them in wallets or staking contracts. When demand spikes, there's simply less ETH available to buy. This tight supply dynamic could amplify Ethereum's moves toward the next resistance levels, especially if staking participation climbs above 35% or ETF flows accelerate.

On the derivatives side, $207 million in short liquidations triggered a sharp squeeze, while options volumes jumped 131%, showing traders are positioning for further gains. This is a rally built on deep market structure shifts, not just retail sentiment.

Regulatory Winds are Turning Favorable

The GENIUS Act has set clear rules for stablecoins, which is a huge boost for Ethereum since most stablecoins run on its network. Recently, the SEC has also made it easier for big funds to create and manage crypto investment products. Along with this, President Trump's move to allow crypto in 401(k) retirement plans could open access to a $12.5 trillion market, potentially bringing in billions of fresh liquidity into the market.

On top of that, over 130 countries are working on central bank digital currencies (CBDCs), and more than 70% of global companies are using blockchain in some form. All this strengthens Ethereum's role as the go-to platform for building the digital economy.

ETH Price Prediction

Near-term, all eyes are on potential SEC approval for staking-enabled ETH ETFs. This move could tighten supply further as institutions stake out for yield. Moreover, Q3 earnings may reveal more corporate treasury allocations, which will further boost market confidence.

"On the technical side, resistance lies between $4,400 and $4,550, with a break potentially targeting $5,200 in a bullish case. Typically, Ethereum's rally is an indication that more money is going to move into other altcoins. If the momentum continues and the market follows a similar trend, we could see a larger altseason take shape, pushing the crypto market cap higher from the current ATH of $4.1 trillion. While the outlook for the market remains strong, it's wise for investors to stay disciplined," Edul Patel said.

Entering through a systematic investment plan (SIP) can help average out costs and reduce the impact of short-term pullbacks, ensuring a more balanced approach to capturing long-term gains.

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