Could Ethereum really hit $10,000 this cycle? Crypto hedge fund XWIN Finance believes the answer lies in liquidity dynamics.
As global M2 money supply reaches record highs and exchange reserves plummet, XWIN analysts argue that Ethereum is approaching its “revaluation phase,” a structural shift that could send ETH surging to five figures if current trends hold.
Over the past three years, the U.S. M2 money supply has entered a renewed expansion phase, hitting a record high of approximately $22.2 trillion. This has significant implications for the entire cryptocurrency market.
Bitcoin has led the way, being the first to capture this “liquidity wave.” It has climbed over 130% since 2022, boasting an exceptionally high correlation with M2 of around 0.9. However, Ethereum seems to be lagging behind, having risen only about 15% during the same period. This gap represents clear “liquidity lag,” but on-chain data indicates this gap may be closing.
Exchange reserves have fallen to around 16.1 million ETH, down more than 25% since 2022. This indicates a structural decline in selling pressure, crucial for any potential price rally.
Additionally, net flows to exchanges have consistently remained negative, showing that ETH is being withdrawn either into self-custody or staking contracts—this trend is pivotal as it indicates long-term holding rather than speculative trading.
The Coinbase Premium Index has also turned positive again, signaling renewed buying interest from U.S. institutions. These indicators mirror conditions observed in early 2020 and 2021, which were precursors to significant Ethereum rallies. Historically, Ethereum tends to lag behind Bitcoin at the beginning of monetary easing cycles, but when BTC dominance falls below 60%, capital often rotates into the altcoin market, and the ETH/BTC ratio tends to rise.
The emerging trends suggest that 2025 could mark a shift from a Bitcoin-led phase to one dominated by Ethereum and other altcoins. Such a transition opens up the target of $10,000 for ETH in Q4, which, if reached, would not stem from speculative bubbles but instead as a natural outcome of liquidity cycling through the crypto market.
Arthur Hayes, co-founder of BitMEX, also resonates with the optimism of reaching $10,000 for Ethereum by the end of 2025. In his July blog post, he connected potential price surges to economic policies tied to U.S. President Donald Trump’s administration, dubbing it a transition to a “wartime economy.”
Hayes argues that under Trump’s credit-heavy economic strategy aimed at enhancing industrial output—in sectors like rare earths and defense manufacturing—the conditions for risk assets, including top cryptocurrencies like ETH, become particularly favorable.
Ethereum recently reclaimed the $4,600 level, gaining 11.34% in the past week with a market capitalization of $561.93 billion. CoinShares reported that U.S. spot Ethereum ETFs, alongside digital asset treasuries, have significantly bolstered ETH’s price rally.
Last week alone, Ethereum saw inflows totaling $1.48 billion, pushing total year-to-date inflows to a record $13.7 billion—nearly triple that of the previous year. The momentum appears to be accelerating, particularly with major asset managers like Grayscale filing to enhance staking capabilities within their Ethereum ETFs.
Kevin Rusher, founder of RAAC, a real-world asset borrowing and lending ecosystem, asserts that Ethereum’s days below $5,000 may soon be over. He notes, “While the crypto market is experiencing a short-term sell-off following ETH’s approach to all-time highs, the medium-term returns for ETH have been remarkable.”
This, combined with staking yields and increasing institutional interest, could create what Rusher terms “fiery demand” for ETH. On the technical side, the weekly Ethereum chart shows a key inflection point as price once again tests the major resistance zone around $4,800. This level has presented challenges for ETH multiple times since 2021.
The repeated challenges near this price range showcase a triple-top pattern, indicating heavy supply pressure just below the all-time high. However, the current trend has pushed Ethereum above the 78.6% Fibonacci retracement level, signaling that the market could be gearing up to complete a cycle toward a 100% extension near $4,917.
If the price manages to break through and sustain a weekly close above this pivotal resistance, it could trigger a strong upward momentum, with Fibonacci projections identifying medium-term targets between $7,000 and $10,000, depending on the strength of the breakout. Conversely, failure to overcome this barrier could lead to a short-term pullback toward the $3,500–$3,800 zone, which aligns with the 61.8% retracement area and rising trendline support.
Read original story Crypto Hedge Fund Predicts Ethereum’s “Next Revaluation Phase” if Liquidity Keeps Rising – $ETH to 10K Realistic? by Anas Hassan at Cryptonews.com
