Ethereum needs more blockchain activity, adoption, to recapture $4K

Ethereum needs stronger blockchain activity, new use cases, and collaboration with public and private interests to regain investor confidence and reclaim its previous all-time high, analysts told Cointelegraph.

Ether (ETH) has been in a downtrend for nearly six weeks, falling below the $4,000 psychological mark on Dec. 16, 2024. The world’s second-largest cryptocurrency declined more than 20% since, trading at $3,260 at the time of writing, Cointelegraph Markets Pro data shows.

To reverse its decline and move toward its previous highs, Ether will need more fundamental blockchain activity first, according to Aurelie Barthere, principal research analyst at Nansen.

“Other layer-1s are catching up with Ethereum regarding apps, use cases, fees and amount staked,” Barthere told Cointelegraph.

Barthere believes Ethereum could benefit from increased collaboration with private and public sector entities, particularly in the US, given recent regulatory momentum in favor of blockchain and crypto.

Additionally, the Elon Musk-led Department of Government Efficiency (DOGE) could boost Ethereum’s adoption. The non-governmental agency has reportedly explored blockchain-based expense tracking and financial management solutions, Barthere noted:

“Musk’s DOGE cost-saving governmental organization has been rumored to have met public blockchain representatives for a potential on-chain expense-tracking and management.”

Ethereum’s role in potential Trump family ventures could also generate further adoption, according to Joseph Lubin, co-founder of Ethereum and founder of Consensys, who suggested the Trump family may be considering building an Ethereum-based cryptocurrency business.

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Ether options flash bullish momentum, but ETH faces resistance at $3,400

Elsewhere, Ether options trading volume has surged to its highest levels in over a month, suggesting that the crypto market is recovering from the recent sell-off, according to a Jan. 31 research report by Bybit and Block Scholes.

Despite the recovery signal, the growing options trading volume won’t directly benefit Ether’s price, a Block Scholes analyst told Cointelegraph.

However, analysts pointed out that the growing number of bullish Ether options contracts suggests traders are betting on a potential price rebound:

“The larger notional value of call option open interest that we have seen throughout January is now once again backed by a bullish skew towards Out of the Money [OTM] calls at volatility smiles across expirations.”

The option skew refers to the difference in implied volatility between out-of-the-money put options and out-of-the-money call options in Ether options markets.

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Ether must reclaim $3,400 before attempting a move toward its all-time high, according to crypto trader Cas Abbé, who wrote in a Feb. 1 X post:

“ETH is forming a bullish divergence on the daily timeframe.[…] To continue the uptrend, ETH needs a 1D close above $3.400, and the rally towards $4,000 will happen very soon.”

However, Ether faces significant resistance at $3,400. A potential move above would trigger over $1.09 billion worth of cumulative leveraged short liquidations, CoinGlass data shows.

Some industry watchers also expect to see an Ether comeback in February thanks to continued institutional buying from Trump’s World Liberty Financial protocol.

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