Ethereum has surged back above the psychologically significant $4,000 level, reigniting bullish sentiment across the cryptocurrency market as technical analysts identify formation patterns that historically precede major price rallies.
The world's second-largest cryptocurrency by market capitalization climbed to approximately $4,060 during Asian trading hours, representing a 3.6% gain over the past 24 hours. The rally comes after ETH touched $3,700 on Oct. 17, marking a nearly 10% recovery from that local bottom.
Despite this momentum, Ethereum remains 18% below its all-time high of $4,878 reached in November 2021, leaving significant room for upside according to market observers.
Bollinger Identifies Rare Reversal Pattern
In a development that has captured the attention of cryptocurrency traders, legendary technical analyst John Bollinger issued a rare prediction for Ethereum on Oct. 18. The creator of the widely-used Bollinger Bands indicator identified potential "W" bottom formations in both Ethereum and Solana charts — a pattern that typically signals bullish reversals after downtrends.
"Potential 'W' bottoms in Bollinger Band terms in $ETHUSD and $SOLUSD, but not in $BTCUSD," Bollinger wrote on social media platform X. "Gonna be time to pay attention soon I think."
The significance of Bollinger's commentary extends beyond mere technical analysis. The analyst makes approximately one crypto call per year, and his previous prediction in April 2025 for Bitcoin proved prescient when BTC rallied more than 50% following his identification of a similar W bottom pattern.
Crypto trader Satoshi Flipper emphasized the historical accuracy of Bollinger's calls: "John Bollinger makes barely one crypto call per year and hasn't made one for ETH in three years until yesterday. And each call he makes goes on to mark generational bottoms."
The W bottom pattern forms when an asset tests support levels twice, creating a double-bottom structure. The second low typically exhibits higher trading volume, indicating robust buyer interest and diminishing selling pressure.
Technical Foundation Strengthens
Beyond Bollinger's observation, multiple technical indicators suggest Ethereum may be positioned for continued gains. The cryptocurrency has maintained critical support levels, with the weekly closing candle at $3,985, according to TradingView data. This support zone stems from December's highs and previous weekly closes, creating a solid foundation for potential upside.
Pseudonymous analyst Rekt Capital noted that ETH "wicked into its multi-year downtrend that was broken months ago for another retest attempt to then return into the range," which the asset continues to hold successfully.
Another analyst operating under the handle Sykodelic expressed strong conviction in Ethereum's technical setup. "There is not a single bearish thing about the ETH chart. It doesn't really get much cleaner," the analyst stated, highlighting several bullish indicators while noting that market makers have "managed to convince everyone that it's game over when the ETH chart looks like this."
Trader Merlijn the Trader identified what he described as "the most explosive setup since 2017," pointing to a "textbook bullish pennant" formation on the monthly timeframe — a continuation pattern that suggests the prior uptrend could resume after consolidation.
Open Interest Decline Signals Healthier Market Structure
A critical metric supporting the bullish case comes from derivatives markets, where Ethereum's open interest has declined substantially while prices remain relatively elevated. According to on-chain data, ETH open interest has fallen 45% from its peak, while Ethereum's price is only down approximately 20% from its highs.
Investor Ted Pillows characterized this divergence as "actually a very bullish thing, as speculation is now very low." The decline in open interest suggests overleveraged positions have been flushed from the market, reducing the risk of cascading liquidations that could trigger sharp price declines.
Open interest peaked at $21 billion in late August, according to Coinglass data. The subsequent reduction indicates that many speculative positions have been closed, potentially setting the stage for a healthier rally driven by spot buying rather than leveraged derivatives trading.
If ETH rallies from current levels with low speculation, Pillows predicted the asset could advance toward $5,500 to $6,000 "without getting too overheated."
Institutional Demand Provides Fundamental Support
The technical picture receives reinforcement from growing institutional participation in Ethereum markets. Investment bank Standard Chartered has maintained a constructive long-term outlook on ETH, though its near-term targets have fluctuated based on market conditions.
In August 2025, the bank raised its year-end ETH target to $7,500, citing surging institutional demand, the passage of the GENIUS Act for stablecoin regulation, and planned network upgrades. The bank noted that Ether treasury companies and spot ETFs have acquired 3.8% of all ETH in circulation since early June — nearly double the fastest rate of Bitcoin accumulation during the 2024 election cycle.
However, Standard Chartered later revised its 2025 target to $4,000 in March 2025, expressing concerns about competition from layer-2 solutions and declining mainnet revenue. The bank's fluctuating projections underscore the complex dynamics affecting Ethereum's valuation.
Recent data shows Ethereum spot ETFs recorded $420 million in net inflows on Oct. 7, marking the seventh consecutive day of positive flows. The combined assets under management for spot Ethereum ETFs now exceed $30 billion, with $803 million in cumulative inflows over the past month.
This institutional accumulation has contributed to tightening supply dynamics. Data from CryptoQuant shows that Ethereum's exchange supply has dropped to its lowest level since 2016, as institutional buyers move coins into cold storage and long-term holders stake their ETH for passive returns.
Market Sentiment Balances Optimism with Caution
While technical and fundamental indicators align favorably for Ethereum, market participants maintain a measured outlook given the broader macroeconomic environment and cryptocurrency market volatility.
The ETH/BTC ratio has increased approximately 7% over the past week, suggesting capital rotation from Bitcoin into Ethereum and potentially other altcoins. This rotation pattern often precedes periods of altcoin outperformance, which market observers refer to as "alt season."
However, Ethereum faces potential headwinds from macroeconomic factors. Concerns about tightening liquidity, geopolitical tensions, and Federal Reserve policy decisions have periodically dampened risk appetite across financial markets, including cryptocurrencies.
Additionally, the derivatives market remains a double-edged sword. While reduced open interest has created healthier conditions, high trading volumes in Ethereum futures and options mean leveraged positions could face rapid liquidation if prices swing suddenly, potentially triggering volatility.
Looking Ahead: Key Levels and Catalysts
As Ethereum consolidates above $4,000, traders are monitoring several critical price levels. A sustained break above $4,200-$4,260 could open the path toward $4,500-$4,650, with further upside potential toward the previous all-time high zone near $4,900.
On the downside, maintaining support at $3,800-$3,900 appears crucial for the bullish thesis. A breakdown below these levels could trigger a retest of the $3,500-$3,700 range, where the 200-day exponential moving average currently resides.
Several upcoming catalysts could influence Ethereum's trajectory in the coming months:
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Network Upgrades: The Pectra upgrade scheduled for Q4 2025, followed by the Fusaka upgrade in November, aims to improve network efficiency and scalability.
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Stablecoin Growth: With over 50% of all stablecoins issued on Ethereum, the sector's projected growth to $2 trillion by 2028 could drive substantial network activity and ETH demand.
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Layer-2 Development: While layer-2 solutions have raised concerns about mainnet revenue, their growth expands Ethereum's total addressable market and could drive long-term value.
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Regulatory Clarity: The passage of the GENIUS Act has provided a framework for stablecoins, potentially accelerating institutional adoption of Ethereum-based financial infrastructure.
Final thoughts
Ethereum's reclamation of the $4,000 level, combined with rare technical analysis from legendary trader John Bollinger, declining speculative interest, and growing institutional participation, has created a confluence of factors that many analysts view as bullish for the cryptocurrency's near-term prospects.
While significant resistance remains before Ethereum can challenge its all-time highs, the technical setup, improving market structure, and fundamental developments suggest the world's leading smart contract platform may be positioned for another leg higher. Whether this translates into the "explosive breakout" some analysts anticipate will depend on sustained institutional buying, continued network development, and broader market conditions remaining supportive of risk assets.
For now, market participants will be watching closely to see if Bollinger's latest call proves as prescient as his previous predictions — potentially marking another generational bottom for Ethereum.