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After a sluggish start to the week, the Ethereum price appears to be undergoing a strong recovery in the past few days. With the renewed bullish momentum, a return above the $4,000 level seems to be only a matter of time for the altcoin price.
Nevertheless, the $4,000 mark is not the only target for several investors; traders appear to be already eyeing the unprecedented $5,000 level. According to a popular blockchain firm, the Ethereum price could surpass this milestone soon.
Potential Drivers Of ETH Price To $5,000
In its latest weekly report, prominent on-chain analytics platform CryptoQuant discussed the factors or drivers that could trigger a potential surge in the price of Ethereum. According to the blockchain firm, the supply-demand and network dynamics could push the ETH price past $5,000.
Firstly, CryptoQuant highlighted the renewed investor confidence and rising demand for Ethereum, as seen with the recent capital inflows in spot ETH ETFs. The US-based Ethereum ETFs have witnessed substantial growth in their holdings since hitting a low of 2.716 million ETH, growing to a record high of 3.41 million ETH on Thursday.
Furthermore, the pace of ETH supply growth has somewhat slowed down in the past few months due to the rising burn rate. According to data from CryptoQuant, the amount of Ethereum tokens burned via fees has been on the rise since September, going from 80 ETH on August 30 to 2,700 ETH as of this writing.
On network dynamics as a potential driver, CryptoQuant pointed out that network activity, including total daily transactions, daily contract calls, and decentralized applications (dApps) adoption, has continued to grow in 2024. For instance, the increasing use of dApp results in greater ETH burns via transaction fees, which can create deflationary pressure on the total ETH supply.
Based on valuation metrics, the Ethereum price could be primed for a rally above $5,000, especially if the demand and supply dynamics continue. For instance, the ETH’s realized price upper band, which served as the top in the previous bull run, is currently at $5,200.
Source: CryptoQuant
Ethereum Price At A Glance
As of this writing, the price of Ethereum stands at around $3,900, reflecting a mere 0.5% increase in the past 24 hours. According to data from CoinGecko, the Ethereum price is still down by over 3% on the weekly timeframe.
The price of Ethereum on the daily timeframe | Source: ETHUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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