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Also, Ethereum is the second largest blockchain and the biggest altcoin project. That is a reason why the crypto market anticipates the United States SEC will approve spot Ethereum ETFs in the near future. This analysis will cover the recent ETH price movement and its future catalysts.
ETH Recent Gains Tied to Decreasing Supply and Staking Demand, DeFi Popularity and Proof – of – stake Burn Mechanism
On February 25th Ethereum broke above the $3,000 price level, a critical resistance zone, and has moved steadily up since. On the 11th of March ETH hit $4000, before sliding back slightly on the 12th. Current data suggests that ETH has the potential to trend above the $4,000 level and possibly enter a major bull run.
Confidence that the ETH price will surpass the $4,000 level and enter an ETH bull run is drawn from several factors including the decrease in Ethereum supply, being driven by the demand for staking. The ETH supply may shrink as a result of the network’s proof-of-stake burn mechanism. Once ETH rises above $4,000 it may get strong resistance at $4,065, $4,185, $4,220, and then $4,300.
Many ETH enthusiasts anticipate that an Ethereum season will come in the near future. As a result, some Ethereum investors are holding onto ETH anticipating a higher price at the right time, considering that there are several expected upgrades on the blockchain that may increase the coin’s demand.
As the screenshot indicates, Ryan S Adams, a crypto analyst and enthusiast, expects the ETH demand and price to rise as a result of staking and restaking of the coin. The expansion of the DeFi ecosystem based on the Ethereum network will also likely increase the demand for ETH which may contribute to a possible Ethereum price surge. Once the Ethereum price surges above $4,000 the market anticipates it will break above the $4,300 resistance level, positioning itself for the next Ether bull run.
Ethereum Price Catalysts as we Move Beyond the Dencun Upgrade
There are several factors that are likely to affect the Ethereum price in 2024, including an increase in staking, the Dencun Upgrade, ETH ETFs and a decrease in its supply. The Bitcoin halving may also affect the ETH price due to their correlation.
Decrease in Ethereum Supply: During a 30-day period that ended on 24 February the Ethereum circulating supply decreased by 18,960 ETH while beginning from 15 February there has been a preference for net withdrawals. The next diagram gives a summary of Net ETH transfers to exchanges, indicating a rise in selling pressure.
Usually, the net transfers to exchanges increase when the Ethereum holders aim to sell their coins. Nonetheless, the fact that the Ether price remained stable around $2,300 indicates that the rise in Ethereum sales was not related to a price rally.
The SEC Approval of Spot ETH ETFs May Trigger An Ethereum Price Surge: We have noted that the SEC’s spot bitcoin ETF approval in January has increased the demand for bitcoin. For example, the BTC ETF issuers like BlackRock have acquired much bitcoin in a short period. The market anticipates a similar effect on the demand for ETH if the SEC approves the ETFs.
The approval of the spot ETH ETFs will likely trigger an Ethereum price rally and a possible ETH bull run. Currently, many crypto analysts have said that there is a 50% chance of SEC approval of the ETFs. For example, Nikolaos Panigirtzoglou, an investment analyst at JPMorgan, told TheBlock that there is a 50% possibility of the SEC’s approval of ETH ETFs. The earliest expected date for the approval of spot Ethereum ETFs is 23 May.
Increase in Ethereum Future Premium: The market usually uses changes in the price of ETH futures to gauge ETH’s possible future trend. In a neutral ETH market the Ethereum futures often trade at a premium of between 5% and 10%. Significantly, a premium of more than 10% shows that the demand for the coin may increase or remain high which influences the price of the underlying asset to rise. However, in the case of Ethereum the premium is stuck above 14% indicating a high demand for ETH.
The Ethereum Dencun upgrade: A number of upgrades lined up for the Ethereum blockchain like the recent Dencun one may also push the ETH price up. Dencun, the Ethereum protocol upgrade, launched on 13 March, and will bring significant benefits to the blockchain such as the reduction in transaction fees.
Rise in Decentralized Finance on Ethereum: Several crypto projects have launched decentralized finance protocols on the Ethereum blockchain which may increase the demand for ETH. For instance, there has been a rise in liquid staking tokens (LRTs) on the blockchain. Ether.FI and Puffer are examples of DeFi platforms that have introduced high-yield liquid staking tokens (LRTs). Interestingly, some of the recently introduced DeFi protocols have been offering airdrops to the Ethereum community. As an example, Starknet, an Ethereum rollup, recently introduced STRK airdrop which has helped to increase the demand for ETH. These factors, among others, may help drive Ethereum season.
Conclusion
Ethereum’s all time high was $4706 – achieved in November 2021. Currently, the $4,000 Ethereum price level is providing some resistance forcing the value of ETH to remain below it for now. Nonetheless, there are various factors that can help to catapult the price of ETH higher. The decrease in its circulating supply, ETH restaking, the Dencun upgrade and the rise in DeFi on the Ethereum blockchain may lead to an increase in the value of the coin – and a potential new all time high in the coming months.