Essential insights:
Strong Ethereum on-chain activity and treasury growth contribute to Ether’s resilience despite pressure from validator queue exits.
The rise of spot Ether ETFs and decreasing exchange balances bolster a positive outlook, setting ETH up for a potential breakout.
Ether (ETH) has struggled to maintain bullish momentum after a brief rise above $4,700 on Saturday. Traders are increasingly cautious as Ethereum’s unstaking queue reached $12 billion. However, heightened network activity and the increasing role of ETH as a corporate reserve asset may ignite a breakout above the $5,000 threshold.
Fees on the Ethereum network surged by 35% compared to the previous week, while active addresses increased by 10%. Robust on-chain activity bolsters Ether’s price, as every transaction and data operation necessitates a payment in ETH.
Higher fees also boost validator yields, enhancing network security and contributing to Ethereum’s automatic burn mechanism, which gradually decreases supply.
Validator queue data indicated a record demand of 2.67 million ETH to exit staking on Saturday, resulting in an estimated wait time of 46 days. Although an unstake doesn’t always signal an immediate intention to sell, the decrease in staking entry queue has raised concerns among some investors. However, this trend could change due to the pace at which Ether treasury companies are accumulating.
Strategic ETH Reserve data shows that such companies added 877,800 ETH in the past month alone, valued at around $4 billion at current prices. Notable contributions came from Bitming Immersion Tech (BMNR), SharpLink Gaming (SBET), and The Ether Machine (ETHM), all of which are either staking a portion of their reserves or have official mandates to start doing so.
Corporate ETH treasuries and spot ETFs driving potential rally to $5,000
Despite recent setbacks, ETH has outperformed the broader crypto market by 21% over the last two months.
Ethereum maintains unrivaled dominance in the decentralized application (DApp) arena, with no other blockchain coming close in total deposits. Including layer-2 solutions, the Ethereum ecosystem commands 64.5% of the total value locked (TVL). In contrast, its largest competitor, Solana, represents less than 9% of the industry’s $169.4 billion TVL, according to DefiLlama data.
The growth of spot Ether exchange-traded funds (ETFs) also supports the price outlook for ETH, with assets under management now at $24.7 billion. These funds offer institutional investors a regulated, accessible method to gain exposure to ETH, solidifying its advantage over competitors.
Related: Why Ether’s price may surge 75% against Bitcoin by New Year’s
Recent net inflows of $213 million into spot Ether ETFs indicate ongoing investor interest. Concurrently, ETH balances on exchanges have fallen to their lowest point in over five years, decreasing the available supply for sale. Glassnode estimates suggest that 2.69 million ETH have been withdrawn from exchanges in just the last two months, reflecting accumulation trends.
Ether’s approach to $5,000 seems increasingly attainable, supported by the reserves being amassed by treasury-focused companies and the ongoing demand for Ether ETFs. Nevertheless, many investors may remain cautious until the Ethereum validator exit queue stabilizes, a delay that could prompt short-term price fluctuations before momentum resumes.
This article is for informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
