Macro Context: Liquidity Wave Hits the Market
The U.S. Treasury recently executed the largest buyback of its own debt ever recorded, totaling $12.5 billion. This action has significant implications for market liquidity and risk assets.
Debt buybacks are a direct form of liquidity support for the market. Increased liquidity typically leads to a pump in risk assets, which in turn often results in cryptocurrency rallies.
This substantial injection of liquidity occurs amidst several other supportive market conditions. These include expectations for the return of quantitative easing (QE), the market pricing in potential interest rate cuts, and a significant influx of capital into the bond market. Furthermore, global central banks, including Japan, are introducing competing stimulus plans.
Even a potential risk factor, such as a Bank of Japan rate hike, appears to be mitigated by Japan's simultaneous announcement of a $185 billion stimulus package. These combined factors are creating a bullish outlook for the first and second quarters of 2026, and the cryptocurrency market, particularly Ethereum, is already showing signs of reacting positively.
Ethereum Price Analysis: Strong Reversal from Support
Ethereum experienced a robust bounce from a key support zone around $2,730, demonstrating a strong V-shaped recovery.
Key Observations From the Chart:
1. ETH broke back above the $3,200 resistance
Ethereum is currently consolidating just above the $3,200 level, which was previously a resistance zone. This consolidation indicates that buyers are defending this breakout, suggesting sustained interest rather than immediate profit-taking.
2. Momentum is cooling, but still bullish
The Stoch RSI indicator shows a pullback from overbought conditions. This is a common occurrence after a significant upward price movement and does not necessarily signal a bearish trend; it often precedes further upward momentum.
3. Structure remains strongly bullish
- •The chart displays a pattern of higher lows and higher highs, which are classic indicators of a bullish trend.
- •Ethereum has shown a clean reclaim of major Exponential Moving Averages (EMAs), reinforcing the bullish sentiment.
- •There is a strong correlation observed between Ethereum's upward momentum and Bitcoin's performance.
The $3,200 level is now a critical point to monitor for future price action.
ETH Price Prediction: What Comes Next?
Upside Targets (Bullish Scenario)
Given the expanding liquidity and Bitcoin's sustained presence above $90,000, several upside targets for Ethereum are anticipated.
1. $3,350 – Minor resistance: A retest of this zone is considered likely if Bitcoin maintains its current stability.
2. $3,500 – Major target: This level represents the next significant resistance on the chart, previously marking a local top. A successful break above $3,500 could pave the way for further gains.
3. $3,800 – Extension target: Reaching this target would depend on strong momentum from Bitcoin and continued inflows of liquidity into the market.
Downside Targets (If Market Pulls Back)
In the event that Ethereum loses the $3,200 area, several downside support levels are identified.
1. $3,050 – Local support: This level is likely to be tested if market momentum begins to cool.
2. $2,900 – Strong support: This is a level where buyers previously demonstrated significant activity, stepping in aggressively to support the price.
3. $2,730 – Major support zone: This is considered Ethereum's key resilience line; a break below this level would indicate a weakening of the current bullish trend.
Currently, none of these identified downside levels are under immediate threat.
How Bitcoin’s Return Above $90,000 Boosted ETH
Ethereum typically experiences a strong performance following periods of Bitcoin stabilization after a correction. In the past 48 hours, several factors have contributed to this positive dynamic.
- •Bitcoin successfully reclaimed the $90,000 mark, signaling a return of confidence in its price action.
- •Market fear has visibly diminished, indicating a more optimistic sentiment among investors.
- •Liquidity injections from the U.S. Treasury have further bolstered market confidence and stability.
- •Risk assets across both the equity and cryptocurrency markets have seen a rebound.
With Bitcoin regaining its dominance and showing positive momentum, traders have shifted their focus back to Ethereum, leading to increased activity in the ETH market.
Historically, a combination of Bitcoin stability and macro liquidity injections has consistently led to accelerated growth for Ethereum. This pattern is precisely what is being observed in the current market conditions.