Ethereum Expected to Hit $5,000 Amid Rising Demand: CryptoQuant

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As a seasoned crypto investor with a decade of experience under my belt, I must admit that the current momentum of Ethereum (ETH) has caught my attention. Having witnessed Bitcoin‘s meteoric rise and subsequent dips, I’ve learned to read between the lines when it comes to market indicators.

Currently, Ethereum (ETH), the second-largest cryptocurrency in terms of market value, is picking up speed, and industry analysts are suggesting that it might not be too far-fetched to expect its price to climb above $5,000 given its current trajectory.

Based on a recent report by The Block, the analytics firm CryptoQuant predicts that Ethereum’s price could significantly increase due to three key factors: high on-chain activity, increasing demand from institutions, and deflationary token behavior. These market signs indicate a strong potential for continued growth, potentially reaching around $3,937 (ETH) with a 24-hour volatility of 4.1%. The current market cap is approximately $474.55 billion, with a 24-hour trading volume of $43.87 billion.

Network Activity at Record Highs

According to CryptoQuant’s analysis, Ethereum’s network has experienced significant expansion in its activity throughout 2024. To clarify, the number of daily transactions has risen substantially, ranging from approximately 6.5 to 7.5 million. In comparison, the average daily transaction volume was around 5 million in 2023.

In a similar vein, the number of daily transactions for decentralized applications (dApps) has escalated to around 6 to 7 million, as indicated by contract calls. This surge in activity has consequently led to an increase in transaction fees, causing more Ether (ETH) to be destroyed via Ethereum’s fee-burning mechanism.

By September, the consumption of ETH outpaced its production, causing a deflationary effect and limiting the expansion of the ETH supply.

Based on analysis by CryptoQuant experts, realized price bands are an essential tool they utilize to estimate Ethereum’s potential future worth. At present, this metric indicates an upper boundary around $5,200 – a level that mirrors the high point Ethereum reached during the 2021 bull market surge.

Analysts anticipate that the upper limit will increase as new investors join at higher prices, implying there may be even larger potential for the market to climb higher.

Institutional Interest Fuel Optimism

As an analyst, I’m finding myself increasingly excited about the potential surge in Ethereum’s price. On-chain indicators are promising, and it seems that this digital asset is poised for growth. Moreover, the level of institutional interest in Ethereum is currently higher than it has ever been before.

In recent times, Ethereum-based exchange-traded funds (ETFs), such as those from BlackRock and Fidelity, have experienced unprecedented investment. Over a span of 13 days, these ETFs have consistently attracted funds, amassing approximately $2 billion during this period. As a result, the total assets under management now stand at around $13.18 billion.

An increased influx of ETF investments into Ethereum suggests that institutions are becoming more confident in Ethereum as a strategic investment option. Additionally, the increasing ETH/BTC ratio indicates that some investors could be shifting their investments from Bitcoin to Ethereum. In other words, it appears that Ethereum is becoming a preferred choice for investors over Bitcoin.

Ethereum (ETH) Price Surges

To provide additional support for the previous statements about Ethereum’s price trend, it has experienced a growth of 4.69% over the last 24 hours. In contrast, Bitcoin has seen a rise of only 1.40%, as reported by Coinspeaker’s market statistics.

The gap between these two aspects could potentially stem from heightened trading activity and a revived sense of positivity across the entire cryptocurrency industry.

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2024-12-12 20:51