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The price of Ethereum has recently surpassed $4,000, a level not reached since March, marking an important milestone in the Cryptocurrency market. This rally has been driven by a number of key factors, such as growing demand for Ethereum exchange-traded funds (ETFs), increased activity within its network, and growing institutional interest in the token as an investment strategy.
Ethereum price evolution in the last 30 days. Source: CoinMarketCap
The explosion of Ethereum ETFs
One of the biggest catalysts has been the massive increase in flows into Ethereum ETFs. According to recent figures, on December 5, these ETFs recorded their largest daily inflow ever, with more than $428 million added. Over the past two weeks, total inflows have reached nearly $2 billion, bringing total Ethereum ETF holdings to 3.43 million ETH.
The recent approval of Ethereum ETFs in the United States has also been a fundamental step. In the last week alone, global Ethereum funds attracted $1.2 billion in new investments, reflecting the growing confidence of institutional investors.
This trend not only cements Ethereum’s value as a strategic asset but also projects a long-term bullish impact.
Network activity drives Ethereum deflation
The Ethereum ecosystem has also witnessed a notable expansion in its network activity. According to data from CryptoQuant, daily Ethereum transactions are now between 6.5 and 7.5 million in 2024, a considerable increase from the 5 million recorded in 2023. This increase is largely due to the growing use of decentralized applications (dApps). ), which has also led to an increase in calls to smart contracts.
Since September, the amount of ETH burned has exceeded its issuance, generating deflationary pressure on the token supply. This impact has been amplified by the increase in transaction fees, which went from burning 80 ETH daily in August to 2,700 ETH in December.
The recent Dencun upgrade has also contributed to slowing supply growth, further reinforcing this deflationary effect.
Obstacles and challenges at the $4,000 level
Despite its current momentum, Ethereum faces significant challenges in consolidating above the psychological mark of $4,000. Historically, this level has triggered significant selling pressure.
In fact, analysts point out that exceeding $4,093 would establish a new annual high, while a rejection could push its price towards $3,550. Currently, Ethereum is trading at $3,915, accumulating an increase of close to 23% in the last month, according to data from CoinMarketCap.
Prospects towards a new all-time high
With a combination of increased institutional inflows, ever-expanding network activity, and increasingly limited supply, Ethereum is well positioned to continue its bullish trajectory.
Some CryptoQuant valuation models project an upper price range of $5,200 in the near term. Furthermore, the current strong market dynamics have led analysts to anticipate that Ethereum could challenge and even surpass its all-time high of $4,891, set in 2021, to hover around $5,000 in the near future.
The ETH/BTC ratio, which has been trending upward lately, also indicates that Ethereum is gaining preference among investors over Bitcoin. This, combined with its fundamental role in the infrastructure of decentralized applications and stablecoin transactions, reinforces its relevance in the crypto market.
In conclusion, the combination of strong institutional interest, an advanced technological ecosystem, and deflationary monetary policy puts Ethereum in a prominent position to set new all-time highs. With continued growth in adoption and investor confidence, the future of this asset looks bright.
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