While Ethereum is up 79.8% over the past year, that’s measly compared to Bitcoin’s 145% and archnemesis Solana’s 246%. However, analysts are increasingly bullish that Ether is all set to break out of its dullness.
Market intelligence firm CryptoQuant predicts that the world’s second-largest crypto by market cap will smash through its current all-time high of $4,878 and hit $5,000 due to growing institutional demand and heightened activity on the Ethereum network.
CryptoQuant Targets $5K ETH Price Amid Renewed Investor Interest
CryptoQuant said in a December 12 note that inflows to the new Ethereum exchange-traded funds (ETFs) had shattered records.
Last week, investors poured a staggering $1.2 billion in new cash into Ethereum funds worldwide, marking a new record just a few months after the spot ETH ETFs went live in the U.S. Notably, the ETH ETFs have not witnessed a single day of net outflow since Nov. 21, pushing the combined assets under management to a record high of $1.98 billion as of Dec. 12.
The CryptoQuant analysts issued a $5,000 target price for ETH, driven by the renewed institutional and retail investor interest in Ether.
“Based on valuation metrics, ETH could be heading above $5,000 if current demand and supply dynamics continue,” the note reads. “According to ETH’s realized price — the average price at which holders purchased their ETH — the current upper limit for ETH’s price stands around $5.2k.”
The analysts indicated that as new buyers buy Ether at higher prices, this upper price band will continue to increase, suggesting further upward potential in the current bull cycle.
Growing Onchain Activity
CryptoQuant also highlighted that the blockchain saw increased activity, with total daily transactions now at 6.5 and 7.5 million for most of the year. The figure hovered at roughly 5 million daily last year.
“Higher network activity on Ethereum signifies increased usage and demand for the network’s capabilities, reflecting growing adoption of decentralized applications,” it stated.
Developers use the Ethereum network to create decentralized applications (DApps), such as decentralized crypto exchanges, where users can trade meme coins or transact with stablecoins.
This heightened activity has pushed network fees higher, leading to Ether being burned under the network’s fee-burning mechanism. “The pace of supply growth has slowed in recent months as the amount of Ethereum burned via fees has increased since September, exerting deflationary pressure on the digital asset,” CryptoQuant explained.
Ether is now changing hands for $3,929 per coin, according to CoinGecko. Over the past 30 days, it’s up about 22% and recently topped the $4,000 mark for the first time since March.