Ethereum (ETH) Adds 7% to Surge Above $3,000, Analyst Sees a Path to $10,500 For a 'Cloud 2.0 Crypto Stock'

May 3, 2021 6:20 AM EDT

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Etheruem (ETH) price has continued to trade in an extremely bullish manner over the weekend. The price action soared above the $3,000 mark to print a fresh record high at $3,200 after surging over 8% today.

ETH is now up more than 325% YTD to hit the highest levels against Bitcoin since August 2018. The price action is now testing key short-term resistance at 0.54 and we may see a pullback from these levels. Bitcoin is up less than 100% YTD.

"At first, the rally was really led by bitcoin because as a lot of the institutional investors came into the space, that would be their natural first port of call. But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on ethereum,” James Quinn, managing director at Q9 Capital, told Reuters.

Analysts and industry experts have blamed the emerging DeFi sector as one of the key drivers behind a rally in Ethereum.

"Surging DeFi volumes continue to push ethereum prices higher as investors gain confidence in crypto and see ethereum as a safe second-place asset," said Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital.

Fundstrat analysts said in a recent note to clients that the crypto market bull remains intact. Therefore, he reiterated his targets of $100,000 and $10,000 on Bitcoin and Ethereum, respectively. Fundstrat has a $10,500 price target on ETH, set in January this year, as well as an “Overweight” rating on ETH/BTC.

“We think the macro backdrop remains bullish for crypto assets. The Fed's recent guidance that it plans to remain accommodative should be supportive for risk assets like crypto,” FundStrat analysts said in a research note.

“We continue to view Ethereum as a Cloud 2.0 crypto stock as we discussed in our prior ETH report. Given this dynamic, we think it’s reasonable to compare Ethereum against the Bessemer Venture Partners (BVP) Emerging Cloud Index. On a revenue multiple basis, Ethereum is about twice as expensive as the cloud index, but on a growth adjusted basis, its ~13x cheaper.”

Another leg higher could see ETH/BTC hit 0.56, where an important resistance area - consisting of the 161.8% Fibonacci extension line and 38.2% Fibo retracement of the big move lower - is located.

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