Ethereum (ETH) could be poised to break the $5,000 mark for the first time, according to blockchain analytics platform CryptoQuant.
In their recent weekly report shared by CryptoSlatethe platform's latest report highlights critical trends in supply demand and network conditions that could drive this trend upwards.
Demand is growing through spot ETFs
Spot Ethereum ETF has seen a dramatic increase in holdings, reflecting growing investor interest. Since their launch in July 2024, the total ETH held by these ETFs in the United States has grown from 3.095 million to a record 3.41 million.
This increase follows a recovery from the September 2024 low of 2.716 million ETH, indicating renewed confidence in Ethereum as a viable investment.
The steady accumulation of ETH by ETFs can have a significant impact on price as strong buying pressure from these vehicles could create an upward trend that could move the asset closer to all-time highs and beyond.
ETH Supply Transfers
The total supply of Ethereum has reached 120 million ETH, the highest level since April 2023. At the same time, the burn rate – where ETH is permanently removed from circulation through transaction fees – has increased to regular from September. For context, the amount of funds burned through transaction fees has grown to over 2,700 ETH from a daily average of 80 ETH in August.
This dynamic creates deflationary pressure, as the burn rate can exceed the distribution of new ETH during times of higher network activity. Unfortunately, the increased use of Ethereum's decentralized applications contributes to higher transaction fees, further increasing the burning rate.
The analysts believe that this distribution pressure can create a supply squeeze that could contribute to favorable conditions for price increases.
Valuation metrics indicate a $5,000 target
Using the complete Ethereum price, which reflects the average price paid by ETH holders, CryptoQuant estimates the current upper price limit at $5,200.
This valuation mirrors the peak of the Ethereum bull run for 2021. Therefore, if the current supply and demand trends continue, ETH is positioned to recover and surpass the previous high level.
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