Key takeaways:
Ethereum is forming a bull flag on the daily chart, with a potential breakout to $4,000.
If Ethereum’s network activity and total value locked continue to grow, ETH price may see further gains.
Ether’s price printed a “bull flag” on the daily chart, a technical chart formation associated with strong upward momentum. Could a strengthening technical setup and increasing transaction fees signal the continuation of ETH’s rally toward $4,000?
Ethereum transaction fees rising is bullish
Marketwide recovery, fueled by Bitcoin’s rise to new all-time highs and improving macroeconomic conditions, saw Ether’s (ETH) price rise by nearly 56% to an eight-week high of $2,734 on May 23, from a low of $1,750 on May 6.
This strength in price is reflected in onchain activity, with Ethereum’s daily transaction count rising by 37% over the last 30 days. These levels were last seen in January 2024, when the hype around the approval of US-based spot Bitcoin ETFs pushed ETH price above $4,000 for the first time since December 2021.
Ethereum daily transaction count. Source: CryptoQuant
Ethereum’s daily average transaction fees also skyrocketed, reaching a 90-day high of 0.0005 ETH ($1.33) on May 22.
Ethereum: Fee per transaction. Source: Source: CryptoQuant
High transaction count and fees suggest that more users are interacting with the network, whether for DeFi, NFTs, or other DApps. It suggests high network activity, often correlating with increased interest and market confidence.
Related: Ethereum holders back in profit as ETH price enters ‘crucial area’ for $3K breakout
Historically, Ether’s price has surged during high-usage periods. For example, during the 2021 DeFi boom, fees spiked to as high as 0.015 ETH due to high demand.
As such, high utilization periods with high fees indicate growth in network activity or bullish sentiment, as more ETH is needed for gas, pushing its price upward.
Increasing TVL supports ETH price bulls
The increase in Ethereum’s network activity is also evident when analyzing the total value locked (TVL) on the network’s smart contracts.
Ethereum’s TVL has risen to $65.3…
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