Ethereum price chart targets $4K as transaction fees hit 3-month high

Ethereum Eyes $4,000 as Transaction Fees Surge

Ethereum (ETH) is showing strong bullish signals, potentially setting the stage for a rally toward $4,000. A key factor supporting this outlook is the increase in transaction fees, reflecting heightened network activity. This surge, combined with other positive indicators, suggests growing confidence in the Ethereum network.

As reported by Cointelegraph, Ether’s price has been forming a “bull flag” on its daily chart, a pattern often associated with strong upward momentum.

Rising Transaction Fees: A Bullish Sign?

The recent market recovery, boosted by Bitcoin’s climb to new all-time highs, has propelled Ether’s price by nearly 56%, reaching an eight-week peak of $2,734 on May 23. This surge is mirrored in on-chain activity, with Ethereum’s daily transaction count jumping by 37% over the past month. Such levels were last observed in January 2024, coinciding with the buzz around the approval of spot Bitcoin ETFs in the U.S.

Ethereum’s average daily transaction fees have also seen a significant rise, hitting a 90-day high of 0.0005 ETH ($1.33) on May 22. This increase suggests heightened user interaction with the network, whether for DeFi, NFTs, or other decentralized applications (DApps), signaling strong network activity and market confidence.

Historically, high-usage periods have correlated with surges in Ether’s price. The DeFi boom of 2021, for instance, saw fees spike due to high demand, ultimately driving prices upward.

TVL Growth Reinforces Bullish Outlook

Another indicator supporting the bullish case for Ethereum is the growth in Total Value Locked (TVL) within its smart contracts. Ethereum’s TVL has surged to $65.3 billion as of May 23, marking a 44% increase from $45.26 billion just a month prior.

Specifically, deposits on Pendle, a tokenization protocol, have increased by 51%, while Ether.fi and EingenLayer have seen growth of 48%. Ethereum maintains its dominance in TVL, holding a 54% market share, significantly higher than Solana (8%) and BNB Chain (5%).

Furthermore, US-listed spot Ether ETFs experienced net inflows of $249 million between May 13 and May 22, adding further tailwinds to demand.

Technical Analysis: Bull Flag Formation

From a technical analysis perspective, the formation of a bull flag pattern on Ethereum’s daily chart suggests a potential breakout. This pattern, characterized by a consolidation phase after a sharp price increase, often precedes further upward movement. The flag resolved after the price broke above the upper trendline at $2,550 and could now rise by as much as the previous uptrend’s height.

In Conclusion

Ethereum’s current market dynamics, marked by rising transaction fees, increasing TVL, and a bullish technical pattern, paint a promising picture for its price trajectory. Whether these factors will sustain the momentum needed to reach $4,000 remains to be seen, but the indicators are certainly encouraging for ETH bulls. This comes just as Ethereum is gaining more attention in the context of crypto regulation.