Key Takeaways

• Ethereum surges 49% in six days, breaching $2,700 for the first time since February.
• Retail sentiment flips bullish as social chatter fuels rally expectations.
• Transaction fees remain low, supporting continued network activity.

Ethereum has staged an eye-catching comeback, breaking above $2,700 for the first time since February 23. This marks a 49% gain in just six days, a swift rebound from its recent local bottom near $1,800 on May 7.

On-chain analytics platform Santiment pointed out the twist that the price action of Ethereum began accelerating when sentiment on social media hit its all-time low. Formerly mocking the token’s halt in action, traders turned around and began seeing entry points as bullish once more, a full turnaround from public sentiment.

Ethereum’s climb resembles the 2017 cycle in that sudden leaps were fueled more by sentiment and network excitement rather than rigorous fundamentals. This time around, however, the underlying forces are perhaps more robust.

Ethereum remains the DeFi and NFT infrastructure leader, with its Layer-2 infrastructure growing exponentially. Although the general altcoin market has had fleeting moments of glory, Ethereum’s sustained utility is the basis for more enduring price movements.

Social sentiments from Santiment show a drastic change. A week back, all the discussion around ETH used to be negative based on relative underperformance against memecoins and other popular assets.

However, price targets surged shortly after the May 8 rally, and most retail traders now look forward towards a $3,500 range. These dynamics are a reflection of the unstable nature of crypto sentiment, particularly among retail traders dealing in a high-reward, high-risk environment.

Ethereum’s recent uptrend has sparked debate of its long-term potential relative to Bitcoin. In 2016–2017, there used to be the notion of a “flippening” that saw Ethereum overtaking Bitcoin on the market cap list because of its vast potential and active developer community.

Although that scenario never occurred, the debate that it engendered is one still valid today. Technological flexibility keeps driving ETH’s status as not simply virtual currency.

Since Bitcoin is the clear leader as a store of value, Ethereum’s status as an infrastructure layer for decentralized applications makes it indispensable within the Web3 ecosystem.

Currently, the market cap of ETH is still roughly half of that of Bitcoin, but the current price surge has fueled speculation as to how much that differential might decrease if the current momentum is sustained throughout the month of May.

Another driver of Ethereum’s recent uptrend is the low transaction fee. The average fee is now $0.84, a significant improvement from the $7+ average six months prior.

Lower fees are attracting more network activity with little of the bottlenecks that crop up with bull runs. If fees stay low, Ethereum might continue attracting retail interest with little immediate correction.

However, a note of warning is appropriate. The 30-day MVRV ratio has risen to +32.5%, way ahead of the +15% threshold generally used as the starting point of overheating.

Though this does not indicate a top, it certainly hints at an impending slow-down or short-term plateau. Nevertheless, with Bitcoin potentially looking towards a dip into $110K, Ethereum’s way towards breaking above $3,000 once more might not be far off.

Related Reading | XRP breaks new high, cloud mining starts making money with one click, daily income is $26,200!