Ethereum Price Projected to Reach $3,600 Amid Increased Layer 2 Activity

Ethereum’s price is poised for a potential jump to $3,600 as gas fees decline and Layer 2 network usage increases. Analysts identify bullish trends emerging from technical patterns, coupled with positive funding rates in the derivatives market. The continuous growth of Layer 2 platforms and decreasing transaction costs is expected to bolster Ethereum’s ecosystem and support its price movements.

Ethereum (ETH) is gaining momentum, with analysts suggesting a potential price target of $3,600 due to a reduction in gas fees and increased Layer 2 network activity. This shift is substantiated by key technical developments, rising user participation, and shifts in market sentiment. A closer examination of the factors contributing to ETH’s anticipated price movement is warranted.

Layer 2 scaling networks, including Arbitrum, Optimism, Base, Starknet, and ZKSync, have significantly bolstered Ethereum’s transaction activity in 2023, as evidenced by data from Bitwise Asset Management and Token Terminal. These platforms enhance Ethereum’s efficiency, making transactions quicker and more cost-effective. In contrast, the Ethereum mainnet’s transaction volume remains stable, illustrating robust engagement with the core network amid fluctuating price dynamics.

A bullish trend is emerging on the ETH price chart, highlighting a breakout from a symmetrical triangle pattern, as noted by technical analyst WhatzTheTicker. This breakout typically signifies the conclusion of a consolidation phase; the subsequent resistance levels are set at $2,200-$2,400. Should ETH maintain these levels, a long-term price target of $3,600 aligns with previous highs from mid-2022, indicating a conducive environment for potential upward movement as market conditions improve.

The funding rate data from CoinGlass provides additional insight into market sentiment. Notably, for most of March and April, the Open Interest-Weighted Funding Rate was largely neutral to negative, signalling cautious trader sentiment. However, a shift to slightly positive funding rates by mid-April suggests the formation of early long positions, and indications of a local price low in early February hint at potential upward pressure if current market dynamics persist.

Moreover, the average gas fees on Ethereum have dipped to as low as 0.372 gwei, approximately $0.01 per transaction, marking some of the lowest levels in years. Lower transaction fees enhance user accessibility and entice developers to create and deploy applications, smart contracts, and decentralised finance tools. This landscape enables broader expansion of the Ethereum ecosystem, particularly attractive for users previously reliant on other blockchains for cost-effective transactions. While reduced gas fees may signal low demand, the surge in Layer 2 traffic counters this narrative, presenting a bullish outlook for Ethereum’s future price developments.