Ethereum rallies 27% after clearing $2,000

Ethereum has climbed 27% over the past seven days after pushing above the psychologically important $2,000 level. The breakout triggered substantial short liquidations — forced buybacks by leveraged traders who had bet on falling prices — adding further momentum to the rally.

Improving regulatory expectations in the United States have also supported the broader cryptocurrency market. The Securities and Exchange Commission has proposed a framework for crypto assets that could give projects more flexibility to raise capital without following the traditional securities-listing process.

At the same time, the Treasury Department announced plans to double its bond buybacks beginning in September. The program, which the department has operated since 2024 to repurchase older government bonds, is expected to inject billions of dollars of liquidity into financial markets, a development that could benefit risk-sensitive assets such as cryptocurrencies.

Institutional demand has strengthened alongside the price recovery. Investors poured more than $1.2 billion into Ethereum-linked exchange-traded funds during August, according to SoSoValue — the strongest monthly inflow since August 2025, when ETH reached its latest record high. Spot Ethereum ETFs have traded in the United States since July 2024, and their monthly flows have since become one of the most closely watched barometers of institutional appetite for ETH.

Crypto market sentiment has shifted sharply as well. The Crypto Fear and Greed Index, a widely followed sentiment gauge compiled by Alternative.me and scored on a scale from 0 to 100, rose from below 40, indicating fear, to 80, representing extreme greed. That is the index's highest reading since December 2024, when Ethereum traded near $4,000. The shift suggests that investors have adopted a more aggressive, risk-on position, although elevated optimism can also increase the possibility of a short-term correction.

On-chain volume signal still pending

Ethereum's on-chain data supports the improving outlook, but a key volume signal has yet to be triggered. The gap between the asset's seven-day and 30-day trading-volume moving averages has narrowed following renewed buying activity and the recent short squeeze.

A crossover in which the seven-day average moves above the 30-day average would provide stronger confirmation of bullish momentum. According to the analysis, this signal has identified the beginning of Ethereum's previous bullish cycles over the past three years. Until that crossover occurs, the rally still lacks full volume-based confirmation.

The successful implementation of Ethereum's planned Glamsterdam upgrade, the network's next major protocol hard fork, could become the market's next major catalyst. A smooth rollout may strengthen confidence in Ethereum's development roadmap and network capabilities, and the upgrade could have an effect similar to the Pectra upgrade in April 2025, which coincided with improving market momentum. Its impact will ultimately depend on implementation, adoption and broader financial-market conditions.

ETH may retest $2,200 before advancing toward $2,800

Ethereum's weekly outlook has shifted from bearish to bullish, with a medium-term target of $2,800. The revised forecast follows an earlier bearish projection of $1,600 for the first half of 2026.

According to the analysis, a confirmed break above $2,200 is viewed as a potential buy signal. Historical price action suggests ETH could then consolidate between $2,200 and $2,800, in a pattern resembling the one seen at the beginning of the April–May 2025 rally.

Momentum indicators nevertheless point to the possibility of a near-term pullback. Ethereum's weekly Relative Strength Index has reached 88, placing it deep in overbought territory — well above the 70 threshold that chart analysts conventionally read as a sign of stretched momentum. A correction toward $2,200 would relieve some of that pressure and could establish a stronger base for another advance, while a failure to hold that level would weaken the current bullish setup.

If Ethereum holds above $2,200 and subsequently clears the $2,800 resistance level, historical patterns suggest a longer-term target near $5,400. That projection remains conditional rather than guaranteed, and sustaining the rally would require continued ETF demand, supportive liquidity conditions, successful network upgrades and sustained trading momentum.

For now, $2,200 stands as the most important support level, while $2,800 represents the next major resistance.

Source: CoinJournal