Key takeaways:
Heightened onchain Ethereum activity and treasury growth bolster Ether’s strength, despite exit pressures from the validator queue.
The expansion of spot Ether ETFs and dwindling exchange reserves strengthen the bullish perspective, setting ETH up for a possible breakout.
Ether (ETH) struggled to maintain bullish traction after a brief rise above $4,700 on Saturday. Traders have grown more risk-averse as Ethereum’s unstaking queue surged to $12 billion. Nevertheless, increased network usage and ETH’s emerging role as a corporate reserve asset could ignite a breakout above $5,000.
Fees on the Ethereum network soared by 35% compared to the previous week, while active addresses rose by 10%. Robust onchain engagement supports Ether’s pricing since each transaction necessitates a payment in ETH.
Higher fees also boost validator yields, enhancing network security and contributing to Ethereum’s automatic burn mechanism that gradually decreases supply.
Validator queue data showed record demand of 2.67 million ETH wishing to exit staking on Saturday, resulting in an estimated wait time of 46 days. While an unstake doesn’t always signal an immediate sale intention, the declining staking entry queue has raised concerns among some investors. However, this trend could reverse given the accumulation pace by Ether treasury firms.
Strategic ETH Reserve data indicates these companies added 877,800 ETH in the last 30 days, equivalent to around $4 billion at current rates. Notable contributions came from Bitming Immersion Tech (BMNR), SharpLink Gaming (SBET), and The Ether Machine (ETHM), all either staking part of their reserves or having formal mandates to commence doing so.
Corporate ETH treasuries and spot ETFs driving potential rally to $5,000
Despite recent dips, ETH has outperformed the larger cryptocurrency market by 21% over the past two months.
Ethereum continues to dominate in the decentralized application (DApp) space, with no other blockchain coming close in total deposits. When accounting for layer-2 solutions, the Ethereum ecosystem commands 64.5% of total value locked (TVL). In contrast, its closest competitor, Solana, captures less than 9% of the industry’s $169.4 billion TVL, as per DefiLlama data.
The growth of spot Ether exchange-traded funds (ETFs) also bolsters ETH’s price expectations, with assets under management reaching $24.7 billion. These funds offer institutional investors a regulated and accessible method to gain exposure to ETH, further solidifying its lead over competitors.
Related: Why Ether’s price may surge 75% versus Bitcoin by New Year’s
Net inflows of $213 million into spot Ether ETFs on Thursday showcase sustained investor interest. Concurrently, ETH reserves on exchanges have plummeted to their lowest point in over five years, limiting the available supply for sale. Glassnode estimates that 2.69 million ETH have been withdrawn from exchanges in the past two months, indicating accumulation.
Ether’s ascent toward $5,000 seems increasingly achievable, backed by reserves accumulated by treasury-focused firms and steady demand for Ether ETFs. Nevertheless, many investors may remain wary until the Ethereum validator exit queue stabilizes, a lag that could lead to short-term price corrections before momentum returns.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
