$4,000: $2,000 or the starting point of Ethereum's next bull run
Words: Alvis
When panic prevailed and ETH briefly fell below $2,000, many believed that a bull market was far away. However, smart money is quietly acting: whale holdings are increasing against the trend, exchanges are withdrawing coins on a large scale, and on-chain indicators are releasing signals that the market is about to reverse. What’s more, Ethereum is on the verge of one of the most important technological upgrades in history, the Pectra upgrade, institutional investors are accelerating their influx into the ETF market, and the macro environment is shifting to easy liquidity.
By all indications, we are at the beginning of a new bull market. ETH is not only expected to return to $3,000, but is more likely to hit $4,000 by the end of 2025, or even higher. It’s time to revisit the tremendous opportunities presented by this technological and financial revolution.
- The signal at the bottom of the market emerges: the divergence between the data on the chain and the flow of funds
According to IntoTheBlock, the first week of March 2025 saw a net exchange outflow of $1.8 billion, the highest since December 2022.
This phenomenon is in stark contrast to the current market sentiment: although the price of ETH briefly fell below $2,000 (the lowest touched $1,989), the number of whale addresses increased by 3.2% against the trend, and the number of addresses holding more than 1K-10KETH reached a peak since 2024. This “wave of exchange withdrawals” often heralds the formation of a market bottom, and similar situations have historically occurred in March 2020 (312 crash) and November 2022 (after the FTX crash), both of which have risen by more than 200%.
Looking at the MVRV-Z score, the current indicator has fallen to -0.87, which is the lowest level in the last 17 months. If the Z-score drops to the area indicated by the arrow on the chart (price 1800-2000), Ethereum will enter the strongest buying zone in its history.
This metric shows that the asset is grossly undervalued by comparing the degree to which the ETH market value deviates from the realized value. It is worth noting that in October 2023, when the indicator hit a similar low, ETH then started a 160% rally.
On-chain activity also sent positive signals: the number of daily active addresses on Ethereum has stabilized at more than 420,000, and the proportion of smart contract interactions in gas fees has increased to 68%, indicating that the demand for ecological applications has not shrunk due to the price drop.
- Accumulating momentum for technological revolution: Pectra upgrades and reconstructs its value base
The Pectra upgrade, which will launch on the mainnet in April 2025, is Ethereum’s largest technological innovation since The Merge. Core improvements include:
Leap in performance: EIP-7691 increased the capacity of blobs per block to 9 (double that of Dencun), reducing the transaction cost of Layer 2 by 80% and the theoretical TPS exceeding 100,000.
Staking Revolution: EIP-7251 raises the staking limit for single validators from 32 ETH to 2048 ETH, which is expected to reduce the number of nodes by 30%, and the annualized staking yield is expected to stabilize at 3.5%-4.2%;
Account abstraction: EIP-7702 supports batch trading and gas fee payment for EOA accounts, allowing users to directly pay fees in USDC, reducing the entry threshold by up to 70%.
The upgrade has already driven a surge in developer activity, with GitHub code submissions up 43% year-over-year and smart contract deployments up 217% after the testnet went live. Historical experience shows that the average price increase reached 85% within 3-6 months after the implementation of major upgrades, and key nodes such as the DAO fork in 2016 and the merger in 2022 have become the starting point of the bull market.
- Institutional entry accelerates: ETF fund flow resonates with pledge returns
The U.S. spot ETH ETF saw a net inflow of $33.7 million in the first week of March 2025 after an initial outflow, with BlackRock ETHA seeing the second-highest single-day inflow of $118 million. Unlike Bitcoin ETFs, ETH ETFs are exploring a staking yield model – the 21Shares proposal allows at least 50% of assets to be used for staking, with an estimated annualized return of 3.2%-4.5%, almost covering the 0.25% management fee cost. If the SEC approves the scheme in Q2, the scale of institutional inflows could be tripled based on the experience of the European ETN market.
The current ETH pledge rate has reached 27.58%, and the value of locked assets has exceeded $68 billion.
After the Pectra upgrade, the unstaking period will be shortened from 27 days to 6 days, and the market capitalization of liquid staking tokens (LST) is expected to increase from 35% to more than 50%. This trend of “yield assetization” is changing the tokenomics of ETH – 72% of the new ETH issued each year will be re-locked at the current staking yield, and the growth rate of actual circulation will fall to a record low of 0.8%.
Fourth, the technical pattern and the law of cycles: the historical bottom reappears
Looking at the weekly level, ETH/USDT forms a triple bottom structure around $2,000: June 2024 (Shanghai upgrade pullback), January 2025 (ETF approval extension), March 2025 (macro liquidity shock). The location corresponds to:
Fibonacci 0.618 retracement ($1975)
200-week MA support ($2018)
Historical Stack Zone (1980-$2030)
The MACD indicator shows that there has been a 5-week bottom divergence at the weekly level, a signal that led to gains of 580% and 120% respectively after appearing in December 2018 and November 2022. Combined with the law of the Bitcoin halving cycle, ETH tends to reach the peak of the cycle 9-12 months after the halving, and Q1-Q2 of 2025 is the layout window period based on the time of the completion of the halving in April 2024.
Fifth, the macro environment has turned: the expectation of liquidity easing has increased
The US non-farm payrolls data for February unexpectedly weakened (143,000 new vs 170,000 expected), the unemployment rate rose to 4.1%, and the CPI fell back to 2.9%, raising market expectations for a Fed rate cut. CME interest rate futures show that the probability of a rate cut in June has risen from 45% to 68%, with an estimated 75 basis points for the full year. Historical data shows that ETH has risen by an average of 214% in the 180 days since the start of the rate-cutting cycle, far outperforming the Nasdaq’s performance of 35% over the same period.
What’s more noteworthy is that the U.S. Treasury plans to issue $850 billion in short-term Treasury bonds in Q2, the largest since 2020. This “fiscal monetization” operation may force the Fed to restart quantitative easing, and the allocation value of cryptocurrencies as “anti-inflation assets” will increase significantly. The Goldman Sachs model shows that ETH has a price sensitivity of 0.38 per $1 trillion in liquidity injections, which is higher than gold’s 0.29.
- Upward Path Deduction: Pointing to the $4,000 timetable
Based on the above multi-dimensional factors, the ETH price may achieve a breakthrough at the following nodes:
April 2025: Pectra upgrades mainnet with technical benefits and price target of $2,500-$2,800;
June 2025: The Federal Reserve will cut interest rates for the first time, and the ETF staking function will be approved, impacting $3,200;
Q3 2025: Layer2 TVL will exceed $50 billion, and the explosion of ecological projects will promote valuation reconstruction, aiming for $4,000.
Risks to watch out for include: technical glitches in upgrades, delays in ETF staking approvals, and a rebound in macro inflation. However, the current $2,000 position has fully reflected the pessimistic expectations, and the analysis of holding costs shows that 78% of the addresses are in the floating loss, and the market is as clear as the historical bottom.
epilogue
While the market is immersed in the panic of falling below $2,000, smart money is quietly deploying. From the technological revolution to institutional allocation to the macro turnaround, all signals point to the same conclusion: we are at the beginning of a new bull market. Those investors who hold on to their fears will eventually reap the rewards of time when Ethereum breaches $4,000. As Vitalik puts it, “The value of blockchain is not to avoid a fall, but to seize every opportunity to rebuild the financial system.” This time, ETH is writing a new legend.
