There are some exciting dynamics in the Ethereum network that could send Ether soaring above $5,000 soon, or at least, analysts at CryptoQuant think.
The perfect storm
In their latest weekly report, CryptoQuant highlighted that the Ethereum network is buzzing with activity, and they believe that if these supply and demand trends continue, we might see Ether trading well above its current price of $3,910.
One key indicator of Ether’s potential is its realized price, the average price at which holders bought their ETH, because this figure represents a strong resistance level.
While it marked the peak during the 2021 bull run, it’s pretty likely to rise now as more investors enter the market and buy ETH at higher prices.
The ETFs and the buying pressure
The renewed interest in ETH is evident in the holdings of spot Ethereum ETFs, which have reached a new high of 3.41 million coins.
Since launching in July 2024, these ETFs have seen their holdings grow big time, bouncing back from a low of 2.716 million ETH in September.
With market participants feeling more confident about investing in ETH, the sustained buying pressure from these ETFs could help push prices upward.
On the supply side, things are looking up too, because the implementation of the EIP-1559 upgrade has allowed a portion of transaction fees to be burned, reducing the net issuance of ETH.
The total supply of ETH has grown to its highest level since April 2023 due to the Dencun upgrade, but the amount being burned indeed has started to increase since September.
Utility
Ethereum has been experiencing a visible surge in network activity, as daily transactions and contract calls have hit record highs in this year.
The network now sees around 6.5 million to 7.5 million transactions daily, up from 5 million last year, while daily contract calls have expanded from 5 million to 7 million since 2023.
Analysts point out that this increased activity leads to more ETH being burned through transaction fees, which can positively influence Ether’s price.
