Ethereum Poised for $5,000 Breakthrough Amid Institutional Demand

By: Eliza Bennet

In recent developments, Ethereum (ETH) is garnering significant attention as it stands on the brink of a potential $5,000 price breakthrough. This potential rise is being propelled by increasing demand from institutional investors alongside evolving supply trends.

According to recent analyses, since the launch of spot Ethereum Exchange Traded Funds (ETFs) in July 2024, there's been a notable uptick in Ethereum holdings, highlighting robust institutional interest. These ETFs now hold a staggering 3.41 million ETH, up from 3.095 million at their inception. This surge epitomizes growing confidence in Ethereum, driven by market players seeking optimal exposure to crypto assets in anticipation of future profitability.

Furthermore, Ethereum's circulating supply has topped 120 million ETH, marking a peak not seen since early 2023. Meanwhile, its burn rate—a mechanism that permanently removes ETH from circulation via transaction fees—has witnessed a significant rise, putting deflationary pressure on its availability. Since September 2024, this metric has climbed from approximately 80 ETH daily to over 2,700 ETH, indicating that Ethereum's transactional activity is contributing to market scarcity.

The intersection of these factors—elevated demand from ETFs and reduced supply due to burning—has created conditions that many anticipate will propel Ethereum's price beyond its previous highs. CryptoQuant's recent valuation metrics underscore this prediction, pinpointing an estimated upper price limit of $5,200 based on the realized price, which considers the average cost paid by ETH holders. If current demand and supply dynamics persist, Ethereum may reach and exceed its all-time high, revisiting levels last observed during the 2021 bull market.