Ethereum’s price recently surpassed $4,000, the highest since March, spurred by surging demand for Ethereum exchange-traded funds (ETFs).
Ethereum’s price recently surpassed $4,000, the highest since March, spurred by surging demand for Ethereum exchange-traded funds (ETFs). On Dec. 5, these funds experienced their largest-ever daily inflow, exceeding $428 million. Over the last two weeks, ETF inflows have totaled nearly $2 billion, bringing total holdings to 3.43 million ETH. Analysts attribute this surge to growing institutional interest in Ethereum as a strategic investment.
CryptoQuant reported that Ethereum’s daily transactions range between 6.5 and 7.5 million in 2024, up from 5 million in 2023. The use of decentralized applications (dApps) on the Ethereum blockchain has similarly increased, with daily contract calls rising to comparable levels. This heightened activity has driven up transaction fees, contributing to Ethereum’s fee-burning mechanism. Since September, Ethereum’s burn rate has surpassed its issuance, creating deflationary pressure on the token’s supply.
Institutional demand is further reflected in the recent approval of Ethereum ETFs in the United States. Last week alone, Ethereum funds worldwide attracted $1.2 billion in new investments, signaling renewed confidence among investors. Analysts believe these trends could drive Ethereum’s price above $5,000, with valuation models from CryptoQuant projecting an upper limit of $5,200.
Despite its recent rise, Ethereum faces challenges breaking through the $4,000 psychological barrier, which historically has triggered significant selling pressure. Analysts note that a move above $4,093 would establish a new yearly high, while rejection at this level could see the price drop toward $3,550. Ethereum is currently trading at $3,884, up nearly 19% over the past month, according to CoinMarketCap.
Increased network activity is also influencing Ethereum’s price dynamics. Transaction fees burned on the network have risen dramatically, from 80 ETH daily in August to 2.7K ETH in December. This has helped slow the supply growth of Ethereum, particularly following the Dencun upgrade earlier this year. CryptoQuant analysts suggest that sustained high activity and institutional interest could fuel further price appreciation.
Additionally, Ethereum ETFs have seen a streak of 13 consecutive days of positive inflows, reflecting strong investor sentiment. Analysts also highlight the climbing ETH/BTC ratio as a potential indicator of Ethereum gaining preference among investors over Bitcoin.
Ethereum remains the backbone for decentralized applications, including crypto exchanges and stablecoin transactions, which are still in high demand. As adoption grows and institutional confidence strengthens, analysts suggest Ethereum could soon surpass its previous all-time high of $4,878, set in 2021, to reach potentially $5,000 in the near future.
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