Key Takeaways
Ethereum could benefit from three catalysts: stablecoins, Project Crypto, and AI. Despite a 12% correction, some ETH traders were betting on a potential recovery.
Wall Street strategist and Fundstrat Chief Investment Officer Tom Lee recently made a bold prediction that Ethereum [ETH] could tag $5.5K in the near term and eye $12K by the end of the year.
In a recent interview with Mario Nawfal on X (formerly Twitter), Lee added that the current bull market could extend to 2035.
He doubled down on Ethereum as the ‘biggest macro trade’ of the decade, citing stablecoins, Project Crypto (Wall Street building on blockchain) and AI as top three catalysts.
“All these should benefit the most reliable smart contract platform, which is Ethereum”
Lee highlighted that agentic AI and robots will generate a lot of data that will need to be verified through zero-knowledge proofs via blockchain.
Simply put, Ethereum will be the foundation layer of global finance and AI.
ETH slips 12%
In fact, the above outlook has sparked a frenzy in crypto treasuries and ETF clients seeking exposure in ETH to capture this expected growth.
The U.S. Spot ETF has attracted nearly $10B in inflows in the past two months.
Similarly, corporate treasuries have accumulated about 3.7% of the ETH supply, worth about $19B at press time value.
Source: Strategic ETH reserve
However, the broader market sell-off at the end of August has tipped the altcoin to erase some of its recent gains on the price chart.
At the time of writing, ETH was down 12% from its record high of $4.95K and cracked the $4.5K level.
If the correction persists, ETH could tag $4K, which doubled as the lower range of the Bollinger Band on the daily chart.
Source: ETH/USDT, TradingView
Additionally, the daily RSI has stayed above the mid-range since July, hence defending it could reinforce bullish bias.
On the other hand, slipping below the mid-range RSI level could suggest further drawdown below $4K.
But despite the short-term weakness, the 25-Delta Skew, which tracks sentiment, spiked higher about 1%-4% for short-dated tenors (1-week, 1-month).
Simply put, traders were buying short-dated calls (bullish bets) more than puts (bearish bets). This suggested that some players expected a potential price recovery in the next few days.
Source: Velo
