Ethereum (ETH) has logged nearly 20% gains in the past week as it outperformed many crypto assets. After reclaiming the $4,200 price level for the first time since 2021, ETH has managed to stay above this level.

Beyond price action, on-chain data reveals a telling change in how the leading altcoins most dedicated holders are behaving.

From Capitulation To Belief

There has been a significant shift in sentiment among long-term Ethereum holders over the past four months. In fact, crypto analyst Ali Martinez found that this cohort of investors is moving from a phase of capitulation to one of belief.

Such a transformation means that investors who previously showed signs of surrender or likely selling at a loss or exiting positions amid market uncertainty are now demonstrating renewed confidence in ETHs future trajectory.

Historically, transitions from capitulation to belief have coincided with the early stages of bullish cycles. This is because reduced selling pressure and stronger holding behavior can create a more favorable supply-demand dynamic for price appreciation.

With sentiment improving, the focus now shifts to ETHs next major resistance levels.

Martinez has now identified $5,210 and $6,946 as Ethereums next potential price targets based on Pricing Bands, a technical tool used to project key resistance and support zones. These levels represent significant milestones that, if reached, could signal ETHs progression into a new price discovery phase.

The $5,210 mark is likely to serve as the first major hurdle, where traders may anticipate increased profit-taking. However, a successful breakout could set the stage toward the higher $6,946 target.

Market sentiment isnt the only thing improving. Ethereums fundamentals are also showing signs of strength.

New Smart Contracts Set Historic Record

CryptoQuant revealed that Ethereums 180-day moving average of new smart contracts has hit an all-time high this week.

This milestone points to strong, sustained developer engagement rather than a short-lived surge. The momentum comes three months after Ethereums 2025 Pectra upgrade, which has boosted scalability and slashed gas fees.

These improvements have fueled real-world adoption, as evidenced by DeFi platform Aave exceeding $10 billion in daily volume and NFT marketplace OpenSea processing over one million transactions daily.

Such heightened smart contract creation has often preceded ETH price rallies, which makes this trend a potential leading indicator for market performance. With record contract activity and enhanced network capabilities, Ethereum appears poised for a development-driven growth cycle.

Ethereum’s developer economy is in overdrive, with Pectra acting as the ignition. Should this pace continue, the fundamentals point toward stronger activity and valuations in the coming months.