Thomas Daniels
Ethereum (ETH) is showing signs of a significant breakout, supported by strong network fundamentals and technical indicators. As of early May, ETH is attempting to reverse a downtrend that has persisted since December, with analysts eyeing the $3,000 level as a short-term target.
Technical Indicators Suggest a Bullish Shift
Ethereum broke above a key six-month descending trendline on April 22, crossing the $1,600 mark, which had acted as a resistance. The 50-day simple moving average (SMA) at $1,775 now provides immediate support, while the next key resistance levels are found at the 100-day SMA of $2,100 and a major supply zone between $2,500 and $2,800, where the 200-day SMA lies.
The Relative Strength Index (RSI) has also surged from 56 to 66, indicating growing bullish momentum. Analysts believe that if Ethereum manages to break through these resistance zones, the psychological level of $3,000 could be within reach.
On-Chain Metrics Reinforce Optimism
Ethereum continues to lead the Layer-1 blockchain sector in terms of total value locked (TVL), which has increased by 41% over the past 30 days to reach $52.8 billion. Concurrently, daily transaction volumes have grown by 22%, climbing to 1.34 million.
DeFi platforms such as BlackRock BUIDL, Spark, and Ether.fi have all seen double-digit growth in deposits, contributing to Ethereum’s renewed on-chain activity and broader network recovery.
Institutional Investors Remain Cautious
Despite these bullish indicators, institutional sentiment appears mixed. Between May 5 and May 7, U.S.-listed spot Ether ETFs recorded net outflows totaling $39.7 million. BlackRock’s ETF alone saw $21.8 million in outflows on May 7, in contrast to significant inflows into comparable Bitcoin products during the same period.
This divergence highlights lingering caution among institutional investors, potentially influenced by market volatility and macroeconomic uncertainty.
Market Outlook
While Ethereum’s resurgence is underpinned by technical strength and improved fundamentals, ETF outflows point to a more cautious investor base. A decisive break above the $2,800 level will likely determine whether ETH can sustainably rally toward the $3,000 milestone. Until then, market participants should closely monitor both on-chain metrics and institutional flows.
