As institutional demand for Ether continues to thrive, on-chain activity is becoming increasingly active, and the price of Ether may experience a new wave of strong upward momentum, potentially breaking through the $5,000 threshold.
Supply and demand dynamics support a target price of $5,000.
The current 'supply and demand dynamics' for Ether show strong price support. If this trend continues, Ether is likely to break through $5,000.
A key indicator—the 'realized price bands', which represent the historical average trading price of Ether, currently has its upper limit at around $5,200, exactly within the price range of the 2021 bull market peak.
As more buyers in the market purchase Ether at higher prices, the upper limit of the 'realized price bands' will also rise, indicating that Ether has greater upward potential in this bull market.
On-chain activity is heating up, and the burning mechanism is promoting a deflationary effect.
Since 2024, trading activity on the Ethereum chain has significantly increased, with daily transaction volumes rising from 5 million in 2023 to between 6.5 million and 7.5 million.
Additionally, the daily number of smart contract calls (a measure of dApp usage) has increased from 5 million last year to between 6 million and 7 million. These data points indicate that Ethereum's ecosystem is becoming increasingly active and prosperous, continually attracting more users and capital inflows.
More importantly, active trading activities have boosted Ethereum's fee income, and these fees, through Ethereum's EIP-1559 burning mechanism, have further reduced the supply of Ether in the market, creating certain deflationary pressure.
Since September of this year, the amount of Ether being burned has gradually increased, effectively creating deflationary pressure at the supply level and solidifying Ether's price foundation.
Institutional investment is gaining momentum, with strong demand for spot ETFs.
At the same time, institutional investor enthusiasm is also increasing, becoming another major driving force for Ether's price. Recently, Ethereum spot ETFs listed in the U.S. have recorded remarkable inflows, particularly the ETHA from BlackRock and FETH from Fidelity.
On Tuesday and Wednesday of this week, these two ETFs collectively purchased $500 million worth of Ether; and just on Wednesday, the net inflow of funds into the Ethereum spot ETF reached $102 million, continuing a streak of positive inflows for 13 consecutive days.
Over the past 13 days, these ETFs have attracted a total of $1.95 billion in inflows, raising their total asset size to $13.18 billion, which is equivalent to 2.86% of Ether's total market capitalization.
As of the time of writing, Ether's trading price is $3,894, maintaining a repeated fluctuation around the $4,000 threshold. If it can effectively hold above $4,000, we might see Ether reach $5,000 this year.
The Ethereum Foundation, as a crucial driver behind the Ethereum ecosystem, inevitably becomes the focus of investors' attention regarding its fund management strategy. If the organization continues to sell off during a market uptrend, it could challenge market confidence and cast a shadow over future price movements.
However, some market observers believe that the Ethereum Foundation, which holds substantial assets, may periodically cash out funds for ecosystem development and research expenses, which is a normal fund management practice. Behind the upward trend, the organization's fund deployment strategy is often quite pragmatic.
In the coming weeks and even longer, the market will closely watch whether the foundation continues to sell off Ether. If the foundation frequently reduces its holdings, it will undoubtedly put pressure on Ether's price. Investors must pay attention to technical and fundamental signals, carefully assess risks, and judge future price trends.
A key level for Bitcoin is $100,000. If Bitcoin can break through and stabilize at this level again, then the current altcoin rebound will not end prematurely. However, if Bitcoin fails to hold above $100,000, the outcome for altcoins is likely to regress back to the starting point.
The liquidity of Ethereum spot ETFs may reflect a realignment or expansion of investment direction, coinciding with the new fiscal year typically starting on December 1 for U.S. mutual funds, and also reflecting the market's optimistic expectations for 2025. If this demand persists, Ethereum's price in 2025 may rise significantly.
During a bull market cycle, market volatility is significant, so it is essential to pay attention to 'risk control', hold good spot positions, and avoid excessive leverage to prevent another sharp drop that could trigger liquidations.