Original title: What needs to happen for Ethereum (ETH) price to reach $4K?
Original author: Marcel Pechman
Original source: Cointelegraph
Compiled by: Mars Finance, MK
Ether (Ethereum) ETH price drops to $3,234 Since trading above $4,000 on March 14, two months have passed since the U.S. Securities and Exchange Commission approved the Ethereum spot exchange-traded fund (ETF) on May 23. Traders are examining whether the bullish momentum has faded, and if not, what can drive its price to continue climbing above $4,000.
The launch of the spot Ethereum ETF is not ideal
Investors are less enthusiastic, in part because of the poor performance of the entire cryptocurrency market, which currently has a total market value of $2.42 trillion, down 16.5% from its peak of $2.82 trillion on March 14, 2024. The main factor contributing to this situation is the Federal Reserve's success in controlling inflation without causing a recession, which has weakened the appeal of alternative assets.
However, Ethereum has its own problems. Its price has fallen 10% over the past two months relative to Bitcoin (BTC). Since July 23, net outflows from U.S. Ethereum spot ETFs have totaled $406 million, with most of the outflows concentrated in Grayscaleâs products.
The total value locked (TVL) of the Ethereum network remains at 17.8 million ETH, the same as two months ago, indicating that the ecosystem growth may have stagnated. Some analysts believe that the high gas fees (over $1.8) in the past few months have promoted the development of its second-layer scaling solutions. However, according to L2Beat data, the TVL of these solutions has remained basically unchanged in the past two months at 12.9 million ETH.
If Ethereum wants to retake the $4,000 support level, it will need to attract more interest from institutional investors. This could be reflected by a trend of net inflows into US spot ETFs or at least by a cessation of outflows from the Grayscale ETHE fund. As institutional capital enters, traders will verify its ecosystem growth by monitoring the TVL of the ecosystem.
Although investors are skeptical about the growth of DApps deposits, this skepticism mainly stems from the huge inflows of funds from venture capital funds or projects before airdrops, but they failed to maintain the initial enthusiasm. Therefore, the growth of TVL should be consistent with the improvement of other on-chain indicators, such as the number of active addresses.
Ethereum TVL needs to grow and its roadmap must be addressed
While Ethereum fans claim that its project is far superior to competitors such as Solana, BNB Chain, and Tron in terms of decentralization, this argument is weaker when well-known investment companies choose to launch projects on other platforms. A recent example is that Hamilton Lane, a publicly traded US asset management company, chose Solana's Libre to launch a tokenized project.
More concerning, Ethereumâs dominance among retail traders has been challenged recently. Thanks to the launch of the memecoin on Pump.fun, Solanaâs market share on decentralized exchanges (DEX) reached 29.6% in July, surpassing Ethereumâs 28.1%, according to data from DefiLlama.
Ultimately, sustainable price growth for Ethereum relies on the implementation of its scalability improvements, including sharding technology and a clear timeline for miner extractable value (MEV) mitigation strategies. Proposed changes, such as Danksharding, aim to increase the current limit from one blob to 64 per block to significantly increase data availability.
The upcoming Pectra fork is expected to introduce Verkle trees, reducing storage requirements and enhancing data accessibility. In addition, investors are also looking forward to the implementation of zero-knowledge SNARKs, which is expected to improve privacy and compress transaction data into concise proofs, thereby reducing the storage requirements of the blockchain.
The path to $4,000 by 2024 remains viable, but only if issues related to institutional adoption, scalability, and growth of the DApps ecosystem are properly addressed.
