Ethereum’s Ether Eyes $5K as Demand and On-Chain Activity Soar
Ethereum’s native cryptocurrency, ether (ETH), appears poised to cross the $5,000 milestone for the first time, driven by a combination of rising investor demand, strong on-chain metrics, and heightened network activity, according to a report from CryptoQuant.
Realized Price Sets an Upper Target
“ETH’s realized price—the average price at which holders acquired their ETH—places the current upper limit for its price around $5.2K,” CryptoQuant analysts stated. This threshold previously marked the peak during the 2021 bull market. As new participants enter the market and purchase ETH at higher prices, this upper price boundary is expected to rise, signaling potential for continued growth.
Institutional Inflows and Growing Network Usage
Ether spot ETFs have experienced a consistent inflow streak, with 13 consecutive days of inflows amounting to nearly $2 billion. While the funds took several months to attract their first billion, they secured the next billion within just five trading days, per data from SoSoValue.
The Ethereum network has also recorded daily transaction volumes between 6.5 million and 7.5 million in recent months, a marked increase from an average of 5 million transactions in 2023. This uptick reflects growing adoption and activity across the network.
Supply Dynamics and Deflationary Pressure
Ethereum’s total supply recently hit 120 million, its highest level since April 2023. However, the increasing rate of ETH burned via transaction fees has offset supply growth. Token burning—permanently removing ETH from circulation—has risen steadily since September. During periods of elevated network activity, the burn rate can outpace issuance, creating deflationary pressure on ETH’s supply.
This deflationary mechanism, coupled with Ethereum’s growing utility for decentralized applications, suggests that demand for ETH could outstrip its supply, further supporting price increases.
DeFi and Staking Ecosystem Expands
The total value locked (TVL) within Ethereum’s ecosystem reached $77 billion this week, the highest since January 2022. Lido dominates this space with $38 billion in staked ETH, while Aave and EigenLayer manage $19 billion and $18 billion, respectively.
This growth reflects renewed interest in Ethereum’s decentralized finance (DeFi) sector, buoyed by increased transaction fees, higher on-chain volumes, and a surge in new wallet creations, as noted in a recent CoinDesk analysis.
Political and Regulatory Tailwinds
The return of Donald Trump to the U.S. presidency in November has reignited optimism among crypto investors. His administration’s stance suggests a potential easing of regulatory pressures on cryptocurrencies, particularly for DeFi platforms, which has bolstered sentiment for ETH and related tokens.
This favorable political climate, combined with Ethereum’s robust fundamentals, could pave the way for ETH to surpass its previous all-time highs from 2021 and achieve new price records.
A Bullish Outlook
“ETH could be heading above $5K if current demand and supply dynamics persist,” CryptoQuant concluded. With on-chain activity, institutional interest, and deflationary forces all aligning, Ethereum’s ether is positioned for significant upward momentum.
