Ethereum (ETH) Reclaims $4K After Months of Consolidation

• Ethereum surpasses $4K after months of stagnation, driven by renewed market optimism.
• Analysts predict ETH could reach $7K, supported by ETF inflows and ecosystem growth.
• Fee recovery and proposed solutions strengthen Ethereums position despite layer-2 competition.

Ethereum (ETH) has broken past the $4,000 level, marking a significant recovery since March 2024. The rally comes after months of stagnant performance, reigniting excitement among investors and developers. Weekly gains of 10.7% reflect growing market confidence.

Analysts point to Donald Trumps November 6 victory and record inflows from exchange-traded funds as major drivers. Projections now suggest Ethereum could reach $7,000 during the current market cycle, setting the stage for further growth.

JUST IN: $4,000 $ETH

— Watcher.Guru (@WatcherGuru) December 6, 2024

Analyzing Ethereums Recovery

For months, Ethereum traded below the 200-day exponential moving average, a critical support level. This phase of sideways price action left investors frustrated and cautious. However, the rally ignited in early November, fueled by renewed market optimism.

Ethereum‘s relative strength index has now climbed to 71, suggesting an overbought zone. Despite this, bullish sentiment remains strong. Developers continue to expand the ecosystem, creating innovative applications and driving adoption. This momentum reinforces Ethereum’s role as a leader in the blockchain space.

Layer-1 Challenges and Proposed Solutions

The Dencun upgrade in March 2024 dramatically reduced fees for layer-2 scaling networks. This reduction caused layer-1 revenues to drop by 99%, sparking concerns about Ethereums sustainability. By August, some analysts feared the network was losing ground to layer-2 solutions. Fee revenue began recovering in September, with December 5 seeing $10.9 million generated by the base layer.

In August, fees had fallen as low as $500,000 daily. This rebound signals a recovery in network demand and activity. Researcher Justin Drake proposed adding a native sequencer to Ethereum‘s roadmap. A layer-1 sequencer could streamline transaction ordering for layer-2 networks. This change would enhance compatibility between decentralized applications and rollups, improving the network’s overall functionality.

The $4,000 milestone reflects Ethereum‘s resilience and adaptability. This rally highlights renewed optimism and growing innovation across the ecosystem. As challenges persist, Ethereum’s ability to evolve will determine its place in the digital economy.