Ethereum’s “Power of 3” Pattern Points to $5K Rally Potential

ETH Price Action Hints at Massive Upside—Is a $5K Rally in Sight?

Ethereum (ETH) may be on the brink of a significant breakout, with analysts pointing to a textbook “Power of 3” setup that historically precedes aggressive market rallies. The pattern suggests that ETH could potentially double in value, targeting levels above $5,000 in the coming months.

However, bullish optimism is clashing with short-term bearish signals, raising the stakes for traders as volatility returns to the market.

Understanding the “Power of 3” Pattern in ETH

Often referred to as the Accumulation–Manipulation–Distribution (AMD) model, the “Power of 3” is a price action framework used by professional and institutional traders to identify breakout zones.

Accumulation Phase: From May 9 to June 20, ETH consolidated between $2,100 and $2,200. Low volatility and sideways trading marked this stage as large buyers quietly built their positions.

Manipulation Phase: A sudden dip below $2,200 triggered panic selling and short entries. However, the move was quickly reversed, with ETH recovering to above $2,500, effectively trapping bearish positions.

Distribution Phase: With ETH trading above $2,450, analysts suggest the price is now entering the final leg of the pattern, where bullish momentum typically accelerates. Liquidity above previous highs becomes a target zone, supporting a price move toward $5,000.

Ethereum 1-day chart. Source: TradingView

ETF Inflows Add Fuel to the Fire

Supporting the bullish outlook is strong on-chain activity and institutional interest. According to Glassnode, U.S.-listed spot ETH ETFs saw net inflows of 106,000 ETH last week, continuing a seven-week streak of positive capital movement into Ethereum products.

This consistent demand from ETFs adds credibility to the price structure, suggesting institutional investors may be accumulating ahead of a broader breakout.

Bearish Headwinds: 25% Correction Still on the Table

Despite the promising setup, Ethereum isn’t without risk.

Spot Ether ETF new flows. Source: Glassnode

Technical analysis indicates that ETH has failed to decisively break above $2,500, a crucial resistance level. In addition, a breakdown from a long-term symmetrical triangle on the biweekly chart implies potential downside toward the $1,600–$1,700 region — a 25% correction from current levels.

Other bearish signals include:

A $237 million ETH transfer from staking to centralized exchanges by a major whale

Over 62,000 ETH sent to Binance in just five days, signaling potential sell pressure

Rising open interest during price declines, hinting at increased short activity

Negative funding rates and declining spot volumes, suggesting a cautious market

If downside momentum builds, key support levels to watch include $2,350 and $2,275, where buyer liquidity is expected to re-enter.

Fractal from 2017: Could This Be ETH’s “Most Hated Rally”?

Some analysts draw comparisons between today’s ETH structure and its 2016–2017 bull run, where a similar setup preceded a multi-month parabolic rise. Bitmine’s new CEO, Thomas Lee, called this scenario the “most hated rally,” referencing investor disbelief in a move fueled largely by institutional accumulation.

While sentiment remains divided, this convergence of on-chain activity, ETF inflows, and technical structure points to a high-stakes moment for Ethereum traders.

Ether price, aggregated open interest, funding rate, spot volume. Source: Velo.chart

Conclusion: Ethereum at a Crossroads

Ethereum’s current price structure could mark the beginning of a historic breakout — or a short-term bull trap. The “Power of 3” pattern, supported by surging ETF inflows and aggressive accumulation, sets the stage for a move toward $5,000. But increasing whale activity and technical resistance suggest caution is warranted.

Investors should closely monitor $2,500 resistance, ETF inflow trends, and on-chain whale behavior to validate whether ETH is gearing up for a breakout or bracing for a deeper correction.

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