After a sluggish start to the week, the price of Ethereum seems to be experiencing a strong recovery in recent days. With the renewed bullish momentum, a return above the $4,000 level appears to be only a matter of time for the altcoin’s price.
However, the $4,000 mark is not the only target for many investors; traders already seem to be eyeing the all-time high of $5,000. According to a popular blockchain company, the price of Ethereum may soon surpass this milestone.
Potential Drivers of ETH Price at $5,000
In its latest weekly report, popular on-chain analytics platform CryptoQuant discussed the factors or drivers that could trigger a potential rise in Ethereum price. According to the blockchain company, supply, demand and network dynamics could push the price of ETH beyond $5,000.
First, CryptoQuant highlighted renewed investor confidence and growing demand for Ethereum, as evidenced by recent capital inflows into spot ETH ETFs. U.S.-based Ethereum ETFs have seen substantial growth in their holdings since hitting a low of 2.716 million ETH, reaching an all-time high of 3.41 million ETH on Thursday.
Additionally, the pace of growth in ETH supply has slowed somewhat over the past few months due to the increased burn rate. According to data from CryptoQuant, the number of Ethereum tokens burned via fees has been increasing since September, from 80 ETH on August 30 to 2,700 ETH at the time of writing.
Regarding network dynamics as a potential driver, CryptoQuant highlighted that network activity, including total daily transactions, daily contract calls, and adoption of decentralized applications (dApps), continued to grow in 2024. For example, increasing dApp usage leads to more ETH burning via transaction fees, which can create deflationary pressure on the total ETH supply.
Based on valuation metrics, Ethereum price could be poised for a surge above $5,000, especially if supply and demand dynamics continue. For example, the upper band of ETH’s realized price, which was the high during the previous bull run, is currently $5,200.
Source: CryptoQuant
Ethereum price at a glance
At the time of writing, the Ethereum price stands at around $3,900, reflecting an increase of just 0.5% over the past 24 hours. According to data from CoinGecko, the Ethereum price is still down more than 3% in the weekly time frame.
The price of Ethereum on the daily timeframe | Source: ETHUSDT chart on TradingView
Featured image from iStock, chart from TradingView
