Ethereum (ETH) appears to be setting the stage for a strong bullish move as Q3 2025 begins. After a turbulent year that saw the altcoin plunge 22.7% year-over-year and a sharp 45.3% in Q1, Ethereum bounced back with a 36.5% rally in Q2. The recovery was especially strong in May, when ETH surged 41.1%, hinting at renewed investor interest and on-chain strength. Now, as July kicks off, Ethereum has already added another 6%, rising from $2,403 to over $2,593. Momentum appears to be building, and analysts believe the conditions are aligning for a potential breakout.

One such analyst, Eric Conner, recently described Ethereum as a “powder keg,” emphasizing that multiple bullish indicators are forming a base for a potential explosive rally. According to Conner and other market observers, four key metrics stand out: stablecoin growth, ETF inflows, declining exchange reserves, and whale accumulation. Each of these factors contributes to growing confidence that ETH could soon push past its current resistance levels.

The first sign of Ethereum’s underlying strength comes from its position as the dominant blockchain for stablecoins. The total market cap of stablecoins on Ethereum has remained strong, currently standing at $126.3 billion. This marks a $888 million increase in just the past seven days. While that number is down from its all-time high of $251 billion, the recent uptick in capital flowing into stablecoins suggests that users continue to trust Ethereum’s infrastructure as a safe and scalable foundation. Tether remains the market leader on Ethereum with $64.1 billion in supply, followed by USDC at $38.1 billion and Ethena’s USDe at $5.09 billion. This growth in stablecoin value signals sustained on-chain activity, which often precedes stronger asset demand.

The second catalyst comes from the growing institutional interest in Ethereum through the introduce of Spot ETFs. After years of anticipation, the U.S. finally approved multiple Ethereum ETFs earlier this year, and their inflows have been steadily rising. In June alone, net inflows into ETH-based ETFs surpassed $1.17 billion. The momentum has continued into July. For instance, BlackRock’s ETHA and Grayscale’s ETHE recorded inflows of $54.8 million and $10 million, respectively, on July 1. This consistent flow of institutional capital reflects a broader shift in how traditional finance views Ethereum—not just as a speculative asset, but as an investment-grade product with long-term potential.

Another bullish indicator is the steadily shrinking supply of ETH on centralized exchanges. Data from CryptoQuant shows that exchange reserves have declined from 19.51 million ETH at the start of 2025 to 19.03 million currently. While the change may appear modest, it reflects a slow but steady accumulation of ETH in private wallets and long-term custody solutions. Fewer tokens on exchanges mean reduced immediate sell pressure, which can act as rocket fuel if demand rises. In tight supply conditions, prices tend to move more sharply, particularly when driven by bullish catalysts.

Finally, large holders—commonly referred to as whales—are making big moves. Wallets holding between 1,000 and 10,000 ETH accumulated more than 800,000 ETH per day during a week in June, marking the most aggressive accumulation since 2017. What’s notable is that this buying spree occurred even as ETH dropped 1.6% in June, signaling that smart money sees the recent dip as a buying opportunity rather than a warning sign.

Altogether, Ethereum appears to be entering a high-conviction zone. With whales buying, ETF inflows growing, exchange reserves shrinking, and stablecoin activity thriving, the ingredients for a major rally are in place. If ETH can successfully break above the $2,600 resistance level, it may open the door for a rapid move to higher price zones. While nothing is guaranteed in crypto markets, current conditions point to a bullish bias for Ethereum in the weeks ahead.