Rally Ahead: Supply-Demand to Push ETH Over $5K: CryptoQuant

CryptoQuant Ethereum

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Tanzeel Akhtar

Journalist

Tanzeel Akhtar

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Tanzeel Akhtar is a seasoned journalist who has been reporting on cryptocurrency and blockchain technology since 2015. Her work has appeared in leading publications including The Wall Street Journal,...

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December 12, 2024

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Ethereum (ETH) could be on the brink of a rally, with the $5,000 mark within reach, driven by strong supply-demand dynamics and growing network activity, according to analysis from CryptoQuant.

There are several factors contributing to this bullish outlook.

Record-High Demand via Spot ETFs

The report highlights investor demand for Ethereum has risen, evidenced by the growth in spot ETH exchange-traded funds (ETFs). Since their U.S. debut in July 2024, these funds have experienced an accumulation of Ethereum.

Holdings have grown from 3.095 million ETH at launch to a record 3.41 million ETH today. This represents a sharp recovery from a September 2024 low of 2.716 million ETH. “This consistent accumulation by ETFs is a sign of renewed institutional confidence in Ethereum,” the analyst noted, further underscoring the upward pressure on ETH’s price.

Controlled Supply Growth Amid Deflationary Trends

Ethereum’s total supply has reached 120.44 million ETH, its highest since April 2023. However, supply growth has decelerated recently, primarily due to an increase in ETH burned via network fees. Since September, deflationary forces have intensified as higher network usage has led to more ETH being removed from circulation.

CryptoQuant reports, “The balance between controlled supply growth and rising demand sets the stage for potential price appreciation.”

Ethereum’s network activity is another key driver of its bullish momentum. Total daily transactions in 2024 have consistently ranged between 6.5 and 7.5 million, compared to just 5 million in 2023.

Similarly, the daily number of contract calls—an indicator of decentralized application (dApp) and smart contract usage—has also climbed to 6-7 million this year, up from a daily average of 5 million in 2023.

This heightened activity has contributed to increased ETH burning, further tightening supply, reports CryptoQuant.

Price Target: $5,000 and Beyond

The factors listed above indicate that Ethereum is primed for a rally. The report highlights that ETH’s realized price, a valuation metric reflecting the average purchase price of ETH holdings, currently suggests an upper price limit of $5,200.

If the current supply-demand trends and network activity persist, ETH could soon break above the $5,000 threshold. With institutional demand, controlled supply growth, and thriving network activity, Ethereum’s fundamentals are aligning for a potential breakout to new heights.

Ethereum price is still down about 7.5% from last week’s highs of $4,100.