Network dynamics may push Ether above $5,000

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According to weekly reports:

The demand for the Ethereum network is growing again, with increased network activity. Valuation indicators show that if supply and demand dynamics continue, the trading price of the second-largest cryptocurrency may exceed $5,000.

As of the time of writing, this asset is valued at $3,910. The average purchase price of ETH for holders is $5,200, marking the peak of the bull market in 2021. However, as new participants buy at higher valuations, the price range will continue to rise.

The recovery of ETH demand is reflected in the holdings of spot Ethereum ETFs, which have reached a new high of 3.41 million. Since its launch in July 2024, holdings have significantly increased, rebounding sharply from a low of 2.716 million in September. Continuing buying pressure for Ethereum ETFs may drive prices up.

Supply dynamics send positive signals:

Since the implementation of the EIP-1559 upgrade, Ethereum's supply dynamics have been on a positive growth trajectory. This upgrade allows for the burning of a portion of transaction fees and reduces net issuance.

The Dencun upgrade has increased ETH's total supply to its highest level since April 2023, but starting in September, the amount of ETH burned through fees has increased, leading to a slowdown in the growth rate of supply, creating deflationary pressure on the asset.

In addition, Ethereum's network activity has increased, with total transaction volume and contract call volume reaching new highs in 2024. Daily transaction totals hover around 6.5 to 7.5 million, up from 5 million last year; daily contract call totals expanded from 5 million in 2023 to 7 million.

The more network activity there is, the more ETH consumed through transaction fees, positively impacting cryptocurrency prices.

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