After a sluggish start to the week, Ethereum price appears to be making a strong recovery over the past few days. With the new bullish momentum, it seems only a matter of time before the altcoin price surpasses the $4,000 level.
Nonetheless, the $4,000 goal is not the only goal for some investors. Traders already appear to be eyeing the unprecedented $5,000 level. According to a prominent blockchain company, the Ethereum price may soon surpass this milestone.
Potential drivers that could push ETH price towards $5,000
In its latest weekly report, CryptoQuant, a prominent on-chain analytics platform, discussed the factors or drivers that could trigger a potential surge in the price of Ethereum. According to the blockchain company, supply and demand and network dynamics could push the price of ETH past $5,000.
First, CryptoQuant highlighted new investor confidence and growing demand for Ethereum, as seen in recent capital inflows into spot ETH ETFs. The US-based Ethereum ETF saw its holdings increase significantly after hitting a low of 2.716 million ETH on Thursday, hitting an all-time high of 3.41 million ETH on Thursday.
Additionally, the pace of ETH supply growth has slowed somewhat over the past few months due to rising burn rates. According to data from CryptoQuant, the amount of Ethereum tokens burned through fees has been increasing since September, rising from 80 ETH on August 30 to 2,700 ETH at the time of writing.
Regarding network dynamics as a potential driver, CryptoQuant noted that network activity, including total daily transactions, daily contract calls, and decentralized application (dApp) adoption, continued to increase in 2024. For example, increased dApp usage could result in ETH being burned through transaction fees, which could create deflationary pressure on the overall ETH supply.
According to valuation indicators, the Ethereum price could be ready for a rebound above $5,000, especially if supply and demand dynamics continue. For example, the realized price cap for ETH, which was at its peak during the previous bull market, is currently $5,200.
Source: CryptoQuant
Ethereum price at a glance
As of this writing, the price of Ethereum is around $3,900, up just 0.5% in the last 24 hours. Ethereum prices are still down more than 3% on a weekly basis, according to data from CoinGecko.
The price of Ethereum on the daily timeframe | Source: ETHUSDT chart on TradingView
Featured image from iStock, chart from TradingView