With reserves down 25% and Coinbase Premium flipping positive, ETH could be gearing up for its biggest rally yet.
Bitcoin reached a record high this week, but Ethereum is also seeing a major resurgence. In fact, the altcoin may be quietly positioning itself for a significant rally as global liquidity continues to expand, according to new market analysis.
The US M2 money supply, which is an important measure of liquidity, has climbed to a record $22.2 trillion after entering a renewed expansion phase over the past three years.
Ethereum’s $10K Path?
In its latest analysis, CryptoQuant explained that Bitcoin has already reflected this surge as it gained more than 130% since 2022 and has shown an unusually strong correlation of about 0.9 with M2. Ethereum, on the other hand, has risen only 15% in the same period, which is being described as a “liquidity lag.”
Despite this, on-chain data indicates that the gap may be narrowing. Exchange reserves for ETH have dropped to roughly 16.1 million, down more than 25% since 2022. This is a sharp reduction in selling pressure. Consistently negative netflows mean that investors are moving Ethereum into self-custody or staking contracts, which also points to tightening supply.
Meanwhile, the Coinbase Premium Index has flipped back into positive territory, amidst renewed interest from US institutions. CryptoQuant found that similar conditions in 2020 and 2021 preceded major Ethereum price surges.
Previous instances show that Ethereum tends to trail Bitcoin during the early stages of monetary easing cycles, but once BTC dominance falls below 60%, capital often rotates into altcoins, which drives gains in the ETH/BTC ratio. That trend now appears to be resurfacing, which hints that 2025 could represent a transformation from Bitcoin-led rallies to broader altcoin participation.
As such, Ethereum could realign with M2 growth, thereby pushing toward higher valuations if global liquidity expansion, as well as the structural decline in exchange reserves, continues. In such a scenario, the $10,000 target for ETH would not represent speculative excess but rather a natural result of liquidity rotation within the crypto market.
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“Quietly but steadily, the next liquidity wave may already be lifting Ethereum beneath the surface.”
Lightning Rally If $5,200 Breaks
The long-term view aligns with a perspective recently shared by Alphractal’s founder, Joao Wedson, who said that the immediate breakout of the crucial $5,200 level could trigger one of the fastest rallies in the asset’s history.
Institutional flows are already fueling confidence, as spot Ethereum ETFs purchased nearly $1.3 billion worth of ETH. BlackRock dominated the buying spree and accounted for over half the total with $691.7 million in purchases.
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