According to CryptoQuant, these network dynamics could push Ether above $5,000

Analysts at on-chain intelligence platform CryptoQuant have identified network dynamics that could push Ether (ETH) above $5,000 in the coming weeks.

According to a weekly report, the Ethereum network is seeing renewed demand and increased network activity. Valuation metrics suggest that the second largest cryptocurrency will trade above $5,000 if supply and demand dynamics continue. The asset was worth $3,910 at press time.

ETH sees growing demand

Evaluating the realized price of ether, the average at which holders bought their ETH, $5,200 is the current upper limit for the crypto asset. While this point marked ETH’s high for the 2021 bull run, the price band will continue to widen as new market entrants buy ETH at higher valuations.

Renewed demand for ETH can be seen in Ethereum exchange-traded fund (ETF) holdings, which hit a new high of 3.41 million coins. These products have seen a significant increase in their holdings since their launch in July 2024, and this growth marks a remarkable recovery from a low of 2.716 million ETH in September.

CryptoQuant noted that with market participants expressing renewed confidence in ETH as an investment vehicle, sustained buying pressure from Ethereum ETFs could contribute to the upward price push.

Supply dynamics Flash positive signal

The supply dynamics of the cryptocurrency have been positive, especially since the implementation of the EIP-1559 update, which allows a portion of the transaction fees to be taxed and reduces the net issuance. The effects of the Dencun upgrade caused the total supply of ETH to grow to its highest level since April 2023; however, the amount of ETH burned through fees began to increase in September.

With the amount of ETH burned through transaction fees increasing from 80 ETH on August 30th to 2,700 as of today, the rate of supply growth has slowed over the past few months. This puts deflationary pressure on assets.

Additionally, Ethereum has seen increased network activity, with total transactions and contract calls reaching new highs in 2024. Total daily network transactions are now around 6.5 million and 7.5 million, compared to 5 million last year, while total daily contract calls have expanded. to 7 million from 5 million in 2023.

Analysts noted that increased network activity in the protocol leads to higher ETH burn through transaction fees, which positively affects the price of the cryptocurrency.

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