From its July low to the top, Ethereum has posted a massive 62% rally. Ether had been negatively diverging from most altcoins and Bitcoin, but that divergence ended abruptly with a sharp breakout. The move was expected, supported by both cycle dynamics and the recently passed “Genius Act.” 

Ether is among the biggest beneficiaries of the Act because most major stablecoins, such as USDC, USDT, and DAI, operate on Ethereum’s L1 or L2 infrastructure. As stablecoin adoption increases, Ether stands to gain significantly. You can find more details in our late-June analysis. 

Ethereum is also supported by crypto cycle dynamics. Historically, when Bitcoin approaches the peak phase of its bull cycle, Ether and other altcoins tend to outperform. While ETF-driven demand has slightly shifted this dynamic, it may still benefit Ethereum due to the potential impact of Ethereum-based ETFs. 

For a more detailed analysis and our projected Bitcoin top for this cycle, please refer to our TradingView post. 

Another key metric supporting Ether’s outlook is the correlation between the BTC/ETH ratio and the Gold/Silver ratio. These two ratios often follow similar patterns and serve as effective indicators of market risk-on or risk-off sentiment. This correlation continues to support Ether’s strength for now. 

(ETHUSD Daily Chart) 

ETHUSD has finally moved close to its 2024 high after two very weak quarters. The current chart pattern resembles a cup formation, which would be completed if the price reaches 4100. 

In our view, Ethereum has enough fundamental support to break out from that level as well. If the formation is completed and a buy signal is triggered by a breakout above 4100, the technical target would be 6830, nearly double the current price. 

(ETHUSD 1-H Chart) 

In the short term, ETH has been rising above the white trendline since early July. The latest downward wave this week appears to be a flag formation. If the downtrend within the flag breaks, ETHUSD could make a move toward 4100 and then potentially form the handle of the cup pattern at that level. 

So far, bearish risks remain limited, but they could increase quickly if the white trendline fails to hold the price.