Is This Correction the Calm Before a Storm to $5,000?

TLDR

Ethereum price recently reached $2,736 before correcting downward
ETH is currently trading above $2,550 and the 100-hourly Simple Moving Average
Technical analysis shows a potential bullish flag pattern forming
Spot ETH ETFs have seen limited inflows compared to Bitcoin ETFs
AI adoption, the Pectra upgrade, and potential regulatory clarity could drive ETH to $5,000 in 2025

Ethereum has been showing resilience in the cryptocurrency market despite recent price fluctuations. The second-largest cryptocurrency by market cap has maintained support above key levels while analysts point to several factors that could propel its price to new heights in the coming year.

ETH recently staged a fresh increase, clearing the $2,720 resistance level and reaching a high of $2,736. Following this peak, the price has entered a correction phase, testing support levels.

The current price is holding above both the $2,550 mark and the 100-hourly Simple Moving Average, which many traders view as important technical indicators.

Technical analysis reveals a short-term declining channel or what could be a bullish flag formation with resistance around $2,630 on the hourly chart. This pattern often precedes continued upward movement if the resistance can be broken.

On the upside, ETH faces hurdles near $2,620, with the next key resistance points at $2,680 and $2,720. A clear move above $2,720 could potentially send the price toward $2,820 or even higher targets.

Path to $5,000

For Ethereum to reach the ambitious $5,000 target that some analysts predict for 2025, several key factors would need to align.

First, institutional adoption through ETH ETFs would need to accelerate. Currently, Ether ETFs are significantly smaller than their Bitcoin counterparts, with the ETH ETF market being 92% smaller than Bitcoin’s $121.5 billion market.

Analysts suggest that in-kind creation and staking approvals from regulators could boost institutional interest in ETH products. These developments are considered likely before the end of 2025, according to Bloomberg Intelligence.

ChatGPT o3 tells you point blank that it would use Ethereum (Base) if it could manage money for you. Not TradFi, Ethereum.

Yet, most people still refuse to see that Ethereum is about to embark on a 1000x mainstream narrative with AI

It’s still SO early pic.twitter.com/yLg6rnktEh

— Eric Conner (@econoar) May 13, 2025

Another crucial factor is increased network activity. Ethereum’s built-in burn mechanism, which was designed to make ETH deflationary based on network demand, requires substantial on-chain activity to be effective.

The recent Pectra upgrade has improved data transmission efficiency and set the stage for enhanced scalability. Layer-2 network activity has already increased by 23% compared to the previous month, with Base network leading at 244.2 million transactions in 30 days.

If ETH fails to clear the $2,630 resistance, it could face further downward pressure. Initial support is near $2,575, with major support at $2,500. A drop below these levels could test lower support at $2,420, $2,350, or even $2,320.

Despite competing cryptocurrencies outperforming ETH in 2025, Ethereum remains uniquely positioned as the only viable alternative to Bitcoin for institutional investors seeking regulatory clarity.

Artificial intelligence might serve as a powerful catalyst for Ethereum growth. Advocates have noted that AI platforms like ChatGPT prefer Ethereum’s layer-2 infrastructure for managing funds via multisignature contracts, allowing autonomous agents to interact with the blockchain.

The potential for smart contract activity to increase tenfold from current levels is within reach. This growth could push ETH to new all-time highs, especially if institutional interest accelerates following regulatory changes.

For traders, the current dip may present a buying opportunity if support levels hold. The bullish case depends on ETH maintaining its position above key moving averages and breaking through the resistance levels ahead.

Technical indicators show mixed signals with the hourly MACD losing momentum in the bullish zone and the RSI below the 50 zone, suggesting some caution in the short term.

The most recent price action shows ETH trading around $2,600, still well below its 2021 peak of $4,868 but maintaining a positive trajectory overall.