Why Ethereum (ETH) Will Reach $5,000? Target Date and 3 Reasons!

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Time is running out for Ethereum, the largest altcoin, and the price is expected to reach $5,000. A mix of technical, macroeconomic and on-chain indicators suggest that Ethereum price should increase this quarter. So what are these reasons? Could short-term investors be on the verge of a big opportunity?

Ethereum (ETH)

Ethereum’s native token ETH has dropped more than 20% after hitting a record high of around $4,867 on November 10, 2021. However, the sharp price drop does not mean that ETH cannot reach the next record high. The price could hit $5,000 in a few months, as several widely watched technical, macroeconomic and on-chain indicators suggest.

At the end of June, we were talking about the $1,900 levels being pretty cheap for the ETH price, and even after months, the price continues to hold well above this zone. So, will expectations come true again?

First of all, the target date for ETH seems to be the end of March at the latest. All three reasons, which will be explained in detail below, support this goal. However, the cryptocurrency markets are full of surprises and technical indicators may not always be accurate. In the light of all this information, it will be in your best interest to determine your own investment preferences and to shape your investment decisions with your free will.

Falling Wedge (Technical Indicator)

ETH’s recent price correction charts a potential classic bullish reversal pattern known as the “falling wedge”. In detail, falling wedges start wide at the top, but get narrower as the price drops. As a result, price action creates a conical shape whose trends fall as the reaction highs and reaction lows converge.

Traders notice an uptrend only after the price rises steadily above the wedge resistance. As a result, expectations are high that ETH price will rise above the falling wedge resistance in the coming sessions. In doing so, it will increase by the maximum distance between the upper and lower trendline of the wedge when measured from the breakout point. This roughly sets the price target for Ethereum at $5,000.

ETH Deposits on Exchanges Decreasing

Investors often move their cryptocurrencies to exchanges when they are considering selling/exchanging them for fiat, stablecoins or other cryptocurrencies. Overall, more transactions to crypto trading platforms reflect the high selling sentiment in the market. Conversely, if token transactions drop, there is a strong sense of accumulation in the market.

Data collected by blockchain analytics service Glassnode shows that the number of on-chain ETH deposits to exchanges dropped to a 23-month low on Jan. Additionally, another Glassnode metric that tracks the number of Ethereum addresses sending ETH to exchanges has reported drops over the past 30 days, a time when the ETH/USD ratio dropped by about 11%.

Meanwhile, the overall balance of ETH across all exchanges has been on a downward trend since August 2020, suggesting that ETH traders are looking bullish as its price has surged from around $400 to just over $3,800 over the same period.

Cheap Dollar

ETH’s drop of over $1,000 from November 2021 to date largely followed the Federal Reserve’s hawkish turn. The US central bank has decided to accelerate the easing of the $120 billion monthly asset purchase program to curb rising inflation, followed by three rate hikes from near-zero levels in 2022. Loose monetary policy was one of the main catalysts behind similar price increases in Ethereum, Bitcoin (BTC) and other crypto markets.

But the Fed’s efforts to balance inflation with three rate hikes from the current 6.8% level may not affect Bitcoin and Ethereum prices in the long run. For example, Antoni Trenchev, managing partner of crypto lender Nexo, believes cheap money is permanent.

“The #1 influencing factor for Bitcoin and cryptocurrencies in 2022 is central bank policy,” he told Bloomberg.

Trenchev said:

“The cheap money with big implications for crypto is here to stay. The Fed simply cannot withstand a 10-20% crash in the stock market with a negative reaction in the bond market.”

Hungarian-born billionaire Thomas Peterffy also said that if fiat money “goes to hell”, investors should dedicate at least 2-3% of their net portfolio to cryptocurrencies like BTC and ETH.

In addition, the founder of Bridgewater Associates, Ray Dalio, announced that he holds BTC and ETH in his portfolio against the risks of cash devaluation caused by high inflation.