Ethereum’s Next Move: Will It Surge to $2,800 or Face a Breakdown?

• Ethereum could surge to $2,800 if it breaks key resistance between $2,100-$2,150.
• A declining US Dollar Index (DXY) signals potential for a strong second quarter in the cryptocurrency market.
• Ethereum’s burn rate has dropped to historic lows, leading to an inflationary environment with a 0.76% annual supply increase.

Michael van de Poppe also noted a deviation in Ethereum’s current movement trend. While it has not yet breached some key levels, it is approaching a significant one. Breaking a level between $2,100 to $2,150 could lead to a sharp move up to $2,800.

Van de Poppe also pointed out that declining US Dollar Index (DXY) is a favorable signal with the recent decline as well. According to him, this could boost the cryptocurrency market towards a good second quarter. Thus, the change in DXY may give the required impulse to ETH to making a definite movement in the nearest future.

Ethereum Faces Inflationary Trend

As a result of the lowered fees, daily burn has reached historic lows. This phenomenon is making it get toward an inflationary environment. Referring to the data from the Ultrasound.money platform, the contemporary burn rate is estimated to be 25000 ETH per annum.

Source:Ultrasound.money

This is rather worrisome, especially considering that the rate of supply increase for ETH is now reaching 0.76% annually. Therefore, it can be concluded that Ethereum’s total supply has been on an uptrend since April of 2024. This is a turn from the deflation period that set in after the shift to the proof-of-stake consensus in September 2022.

Source:Ultrasound.money

Before the Merge, Ethereum had an inherently high inflation rate by way of mining-based creation. It was thought that with the change to proof-of-stake this problem would be solved. However, the continuous increase in supply has now put total ETH supply at its pre merger high as indicated by the table above.

The decision to perform a hard fork in London in 2021 is also essential for the consideration of supply characteristics. The fork was a mechanism of burning a part of transaction fees. This was supposed to decrease Ethereum’s supply and thereby regulate inflation on the network. However, such trends as the ETH burn rate decrease have partially relieved these impacts.

Critical $2,000 Support Level

The price behavior of the ETH in the past month caused the formation of the bear flag pattern on the daily chart. Should the ETH fail to climb back up to and close above the $2,000 level, this could indeed be a breakdown. It is noteworthy that it is currently the key short-term support level for Ethereum’s price.

Source: TradingView

The future of Ethereum, however, is not set in stone, with there being as well both a bull and bear market that is possible. The events in the previous weeks indicate that traders and investors should keep their eyes on key levels in the coming weeks. These are the crucial points for Ethereum, and depending on the price direction, Ethereum can either make a bullish breakout or a bearish breakdown.