ETH tracks M2 liquidity! The Federal Reserve (FED) prints money at a record high, whales frantically scoop up the last chips before $4000, countdown to new ATH.

M2 Money Supply has reached a new historical high, with Ethereum (ETH) precisely tracking the global liquidity injection rhythm like a heat-seeking missile. The price has strongly rebounded from the Q1 low of $1,700 to around $3,900, a rise of over 129%. Institutional whales and smart money are demonstrating textbook-level buy low accumulation strategies, doubling down on every technical pullback to ensure that chip accumulation is completed before ETH breaks the key psychological barrier of $4,000. Technical analysis shows that ETH is setting up a series of bear traps, with far better resilience than Bitcoin. The short-term target is $4,200, with the mid-term aiming to challenge the historical high of $4,800 from 2021. The four-year bull run cycle blueprint indicates that the altcoin season is about to explode, and with the dual driving forces of M2 liquidity flooding and institutional allocation demands, the creation of a new ATH for ETH has entered its final countdown stage.

Currency Flood Approaches: M2 Supply Hits New High Driving ETH Liquidity Tracking

(Source: Merlijn)

The global central bank monetary policy shift is injecting unprecedented liquidity support into the cryptocurrency market. The US M2 Money Supply has reached a historic high again, surpassing the $21.8 trillion mark, an increase of over 40% compared to pre-pandemic levels in 2020. This monetary expansion cycle shows an astonishing positive correlation with cryptocurrency price trends, with ETH, as a representative of liquidity-sensitive assets, tracking the M2 injection rhythm like a precision-guided missile.

Historical data backtesting this correlation: During the explosive growth of M2 from 2020 to 2021, ETH surged from $200 to a peak of $4,800, an increase of up to 2,300%; in the monetary tightening cycle from 2022 to 2023, ETH fell to a low of $880, a decline of 82%. Currently, M2 has re-entered an expansion trajectory, providing macroeconomic support for ETH prices.

The liquidity transmission mechanism is maturing: institutional investors are converting fiat liquidity into ETH demand through diversified channels like ETFs, derivatives, and DeFi staking, creating a deep integration between traditional finance and the crypto market. With the implementation of the Trump administration's 401(k) pension policy, this transmission effect will be further amplified.

Whale Chip Battle: Smart Money Frenzied Buying Before 4000 USD

On-chain data reveals an ongoing battle for chips. The number of ETH whale addresses (holding over 1,000 ETH) has increased by 156 in the past 30 days, with total holdings surpassing 42 million ETH, accounting for 35% of the circulating supply. More notably, the accumulation rate of institutional-level large holders (holding over 10,000 ETH) is accelerating, with an average daily net increase of 8,500 ETH.

The analysis of trading behavior shows the cleverness of the smart money strategy: whenever the ETH price experiences a technical pullback of 5-8%, whale addresses immediately activate programmatic buying, viewing the pullback as a rare opportunity to build positions. This buy low accumulation strategy is particularly evident in the $3,700-$3,900 range, with a cumulative buying volume exceeding 1.2 million ETH, valued at approximately $4.5 billion.

Institutional holdings structure further confirms bullish expectations: Grayscale ETHE holdings remain stable at 1.8 million ETH, BlackRock ETHA rapidly increased to 650,000 ETH, and the total staked ETH has surpassed 34 million ETH, setting a new historical high. The continuous increase in these long-term locked positions provides supply-side support for ETH prices.

$4,000 psychological game: Analysts generally believe that institutions are completing the final round of accumulation in front of the key resistance level of $4,000. Once the price confirms a breakout above this level, FOMO sentiment will be completely ignited, driving ETH into an accelerated upward phase.

Technical Advantages: Bear Trap Setup, Downward Resistance Crushing BTC

The technical trend of ETH exhibits textbook-level strong characteristics, contrasting sharply with Bitcoin. In the last two market pullbacks, BTC fell from $119,000 to $113,000, a drop of 5%, triggering long liquidations of up to $107 million; while ETH only adjusted from $3,950 to $3,750, with a drop of only 5%, and the scale and duration of liquidations were far smaller than those of BTC.

The bear trap mechanism is in effect: whenever the market experiences panic selling, ETH always quickly stabilizes and rebounds near key support levels, with a clear V-shaped recovery characteristic. This trend effectively cleans out weak hands while providing steadfast holders with an opportunity to accumulate, resulting in an optimization effect on the chip structure.

The technical indicator array shows a bullish dominant pattern:

The RSI indicator remains stable in the 65-70 range, indicating a healthy overbought condition.

The MACD golden cross signal remains effective, with the green histogram gradually expanding.

The 200-day moving average has moved up from $2,800 to $3,200, providing strong support;

The Bollinger Bands continue to expand, with the price operating within the upper band.

Support and Resistance Analysis: The current main support levels for ETH are $3,750 (20-day EMA) and $3,600 (50-day EMA), while the key resistance levels are the psychological barrier of $4,000 and the technical high of $4,200.

Cycle Positioning: Alts Season is on the Eve of Explosion, ETH Leads the Charge

The four-year bull market cycle theory provides a historical reference for the current ETH trend. According to traditional cyclical patterns, the second year after the Bitcoin halving (2025) is usually the best period for altcoin performance, with ETH, as the leading altcoin, taking on the responsibility of leading the charge.

Analysis of Cyclical Anomalies: In Q1 2025, ETH fell to a low of $1,700, breaking the market's expectation of a breakthrough of $4,000 in the first quarter. However, this cyclical misalignment precisely accumulated momentum for a subsequent larger scale uptrend, with the current price rebounding over 129% from the low, validating the self-correcting ability of cyclical theory.

Altcoin season characteristic confirmation:

The ETH/BTC exchange rate has rebounded from a low of 0.026 to 0.034, re-entering an upward channel;

DeFi TVL breaks $250 billion, reaching a new high since 2022;

Layer 2 ecosystem experiences explosive growth, with daily trading volume exceeding 70% of the mainnet;

The NFT market is recovering, with the average floor price of blue-chip projects rising by 45%.

Institutional allocation logic: With the continuous inflow of ETH ETFs and the increase in corporate financial allocations, ETH is transitioning from a speculative target to an institutional-grade asset. This identity transformation will provide long-term upward support for the price.

Price Prediction: 4200 short-term target, 4800 medium-term challenge

The price prediction of ETH under the Technical Analysis framework shows a stair-step upward characteristic:

1. First Stage: Break through the psychological barrier of 4,000 USD, target 4,200 USD

Time window: next 2-3 weeks

Trigger Condition: Weekly close confirms above $4,000

Increase Range: 5-8%

2. Stage Two: Challenge the historical high of $4,800 in 2021

Time Window: Q4 2025 - Q1 2026

Trigger conditions: Breakout after consolidation at $4,200 with increased volume.

Price Increase: 14-20%

3. Third Stage: Create a New ATH, Target 5,500-6,000 USD

Time window: First half of 2026

Trigger conditions: Institutional funds entering on a large scale + Technical upgrades as a catalyst

Price Increase: 25-40%

Risk Management: If ETH falls below the key support of $3,600, the short-term adjustment target is the range of $3,400-$3,500.

Conclusion

The precise tracking ability of ETH against M2 Liquidity, combined with the strategic layout of Whale funds and multiple breakthrough signals from the technical side, has laid a solid foundation for creating new historical highs. The current market is on the eve of an altcoin season explosion, with ETH, as the leader of the ecosystem and the preferred choice for institutional allocation, expected to be the biggest beneficiary of this bull run. Investors are advised to seize the critical moment of breaking through 4,000 USD, using a phased accumulation strategy to participate in this historic trend. However, attention should be paid to changes in the macro environment and regulatory policy risks, ensuring good position management and risk control. Investment reminder: The cryptocurrency market is highly volatile; please invest rationally based on personal risk tolerance, and past performance does not guarantee future returns.