Ethereum (ETH) Is Rallying, But Can It Hit $4,500?

Key Points

• Growing institutional adoption is bringing new investor groups into Ethereum.

• Popular stablecoins like USDC and Ethena are actually Ethereum-based tokens.

• Ethereum's extreme volatility means it could hit $4,500 quickly but also drop back below it just as fast.

• 10 stocks we like better than Ethereum ›

After reaching a fresh all-time high on Aug. 24, Ethereum (CRYPTO: ETH) hit a rough patch. The second largest cryptocurrency retreated as much as 14.1% from the new peak in less than two weeks.

Ethereum is back on a positive trend again, rising 1.8% in two days. It's not a triumphant return to incredible growth, but an uptick is an uptick.

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Currently parked at $4,433 per coin, many investors wonder if Ethereum can get back to $4,500 again (and beyond).

I'm pretty sure the cryptocurrency will reach that important benchmark level fairly soon. Let's look at the reasons why, and how stable Ethereum's price will be after climbing that hill anew. Spoiler alert: I don't think it will be stable at all.

$4,500 shouldn't be too hard for Ethereum

As I'm writing this on Sept. 8, Ethereum's price is just 3.8% below the psychologically important $4,500 level. Getting back there shouldn't be too hard -- the random chart squiggles of a normal Tuesday night are often enough to close a 4% gap in the volatile cryptocurrency market.

That's only more true when the investment I'm talking about happens to have some bullish catalysts on tap. Ethereum has several of those. I can't pretend to know everything that's going on here, but consider this handful of examples:

• Spot Ethereum exchange-traded funds (ETFs) have been around since July 2024, and they are adding bullish pressure to the underlying Ether coin. Leading low-fee alternatives iShares Ethereum Trust (NASDAQ: ETHA) and Fidelity Ethereum Fund (NYSEMKT: FETH) have seen asset inflows of 113% and 46% (respectively) in the last 3 months, for example.
• Going hand in hand with the ETF availability is the rising Ethereum interest from new investor groups. From financial advisors serving high-net-worth clients to corporations and retirement accounts, many investors now find it easy to add Ethereum exposure to their portfolios.
• From a longer-term perspective, crypto-based apps and Web3 concepts are popping up everywhere. I can't name a true killer app built around the Ethereum blockchain and its smart contracts -- yet. But there's enough activity in the app developer industry to make big Ethereum wins very likely in the next year or two. Real-world app activity on the blockchain will drive Ethereum's value over time.
• Come to think of it, there is already a high-volume Ethereum use case brewing. You may have noticed a soaring interest in stablecoins lately. Many of these digital dollars (or Euros, or Yen, and so on) are actually Ethereum-based ERC-20 tokens at heart. So the next time you're using popular stablecoins like USDC (CRYPTO: USDC) or Ethena (CRYPTO: USDE) to manage the funds in your cryptocurrency exchange account, you're actually making Ethereum transactions.

... but the timing for this move is murky

These catalysts should keep lifting Ethereum higher over time. I can't promise quick price jumps, but the bullish elements combine into a robust platform for positive long-term momentum.

So Ethereum could rise above $4,500 very quickly, and may very well have done so before this analysis reached your screen. It could also dip back below this nice, round price again. That's what volatile investments do, and Ethereum is a classic example. Spot Ethereum ETFs (which rise and fall as quickly as Ethereum itself) have beta values of 4.8 these days.

As a reminder, stocks and funds with a beta value of 1.0 stick very close to the S&P 500 (SNPINDEX: ^GSPC) market index. Ethereum's lofty beta value shows that the coin tends to rise and fall in the same direction as the stock market, but you can multiply each price jump or drop by 4.8.

Ethereum is among the most volatile investments out there. Among the S&P 500 stocks, the highest beta value you'll see is crypto exchange Coinbase Global (NASDAQ: COIN) at 3.7.

Image source: Getty Images.

Think years, not days, for Ethereum's real potential

So I don't know where Ethereum's chart is going tomorrow, or next week, or even over the next year. It's just too unpredictable, often moving down when there's good news or up on no news at all. But in the long run, it's one of the most vital and promising cryptocurrencies available today. Yes, Ethereum will trade at $4,500 someday, and rise far above that line in five or 10 years.

You can quote me on that.

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Anders Bylund has positions in Ethereum and iShares Ethereum Trust. The Motley Fool has positions in and recommends Ethereum. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.