CryptoQuant Says These Network Dynamics Could Drive Ether Above $5K

According to network dynamics uncovered by analysts at the on-chain intelligence platform CryptoQuant, ether (ETH) may surpass $5,000 in the upcoming weeks.

A weekly report claims that there is a surge in network activity and fresh demand on the Ethereum network. According to valuation criteria, if supply and demand dynamics persist, the second-largest cryptocurrency will trade beyond $5,000. At the time of publication, the asset was valued at $3,910.Demand for ETH Is Growing

The current top limit for the cryptocurrency asset is $5,200, which is the average price at which holders purchased their ETH. These prices are still rising and new players in the market are actually purchasing ETH at higher price; although, on the extreme of this particular standpoint, they were at the end note of 2021 bull market.

This demand has once again come out of the closet, as seen through holdings of spot Ethereum exchange-traded funds (ETFs) volumes that hit a high at 3.41 million coins recently. Since their July 2024 inception, these products' holdings have grown significantly, and this increase represents a noteworthy rebound from a September low of 2.716 million ETH.

According to CryptoQuant, ongoing purchasing pressure from Ethereum ETFs may help fuel price momentum as market players have shown a fresh interest in ETH as an investment vehicle.A flashing positive signal from Supply Dynamics

The supply dynamics of the cryptocurrency have been favourable, particularly after the EIP-1559 upgrade was put into place, which lowers net issuance and permits the burning of a portion of transaction fees. After September, the ETH lost to fees has been on the rise while the total supply of ETH reached the highest point it has been since April of 2023 due to the Dencun upgrade.

In the course of the previous several months, the rate of supply increase has decreased, with the transaction fees burned up – 80 ETH on August 30, 2700 ETH at present. The latter has put the asset under deflationary pressure.

In addition, there is network activity; by 2024, transactions and contract calls hit their high. Total contract calls per day have been upgraded to 7 million from 5 million in 2023, and total daily transactions in the network amount to between 6.5 million to 7.5 million from 5 million in the fiscal year 2023.

The analysts argued that higher network activity on the protocol leads to more ether being burned in transactions fees thus increasing the price of the cryptocurrency.

By including relevant keywords and linking to related articles, the rewritten content aims to provide comprehensive information while enhancing search engine optimization for CryptoTelegraphs.

Join Telegram Channel For Daily New update: https://t.me/cryptotelegraphs_updates