Key takeaways:
Robust onchain Ethereum activity and treasury growth bolster Ether’s strength despite exit pressure from the validator queue.
The expansion of spot Ether ETFs and shrinking exchange balances enhance the optimistic outlook, positioning ETH for a possible breakout.
Ether (ETH) struggled to maintain its bullish momentum after a brief surge past $4,700 on Saturday. Traders have grown increasingly cautious due to Ethereum’s unstaking queue climbing to $12 billion. Nonetheless, vigorous network activity and ETH’s rising status as a corporate reserve asset may ignite a breakout above the $5,000 threshold.
Fees on the Ethereum network increased by 35% compared to the prior week, while active addresses saw a 10% rise. High onchain activity supports Ether’s price as every transaction and data operation necessitates a payment in ETH.
Increased fees also enhance validator yields, thereby fortifying network security and contributing to Ethereum’s automatic burn mechanism that incrementally reduces supply.
Validator queue data indicated unprecedented demand of 2.67 million ETH wishing to exit the staking process on Saturday, resulting in an estimated wait time of 46 days. While an unstake doesn’t always signify an immediate selling intent, the declining staking entry queue has raised concerns for some investors. However, this trend could shift due to the rapid accumulation by Ether treasury companies.
Strategic ETH Reserve data reveals such companies contributed 877,800 ETH in just the past 30 days, translating to about $4 billion at current prices. Significant additions came from Bitming Immersion Tech (BMNR), SharpLink Gaming (SBET), and The Ether Machine (ETHM), all of which are either staking parts of their reserves or have plans to do so.
Corporate ETH treasuries and spot ETFs driving potential rally to $5,000
Despite recent declines, ETH has still surpassed the overall cryptocurrency market by 21% over the last two months.
Ethereum’s supremacy in the decentralized application (DApp) realm remains unrivaled, with no other blockchain nearing its total deposits. Including layer-2 solutions, the Ethereum ecosystem commands 64.5% of total value locked (TVL). In contrast, its closest competitor, Solana, represents less than 9% of the industry’s $169.4 billion TVL, according to DefiLlama data.
The rise of spot Ether exchange-traded funds (ETFs) further bolsters ETH’s price outlook, with assets under management climbing to $24.7 billion. These funds offer institutional investors a regulated and accessible way to gain exposure to ETH, solidifying its dominance 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 underscore ongoing investor interest. Concurrently, ETH balances on exchanges have fallen to their lowest level in over five years, limiting the available supply for sale. Glassnode estimates that 2.69 million ETH were withdrawn from exchanges in the last two months, reflecting ongoing accumulation.
Ether’s journey toward $5,000 appears increasingly plausible given the reserves accumulating within treasury-focused entities and sustained interest in Ether ETFs. Nonetheless, many investors may remain cautious until the Ethereum validator exit queue stabilizes, a delay that could trigger short-term price corrections prior to momentum resuming.
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.
