Ethereum (ETH) has fundamental factors that will allow it to outperform in the next stage of the 2024 bull market. Analysts see ETH as lagging with its current price of under $4,000. A better reward structure and a large percentage of locked tokens may further boost ETH.
Ethereum (ETH) is entering a new stage after ETF products were approved for launch. Solana and Binance Smart Chain are challenging Ethereum, but it still plays a crucial role in Layer 2 networks and has many liquidity pools. Therefore, some believe ETH may be set to outperform during the next months of the bull cycle.
ETH traded at $3,808.18, while attention shifted to Bitcoin (BTC) and Binance Coin (BNB) in the short term. In 2024, ETH has mostly tracked BTC, with deeper losses during corrections. The expectation is that ETH may outperform and regain ground against BTC.
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Whales prepare to hold ETH
Whales have been accelerating ETH accumulation since March. This holding trend affects smaller wallets as well. The holding trend is in addition to the constant inflows of ETH into the staking smart contract. Holding ETH may also be important for future ETF products, requiring transparent, verified token vaults.
The current bull market is causing people to withdraw their money from centralized exchanges, which might result in more people holding onto their investments. As of June 2024, more than 97% of stakers are in the money. Staking accelerated significantly in 2023, when ETH still traded under $2,000.
The Ethereum staking wallet now holds more than 45.7M tokens, and is constantly drawing in new deposits. More than 1M wallets now hold enough ETH to validate the network.
Additionally, some ETH remains locked in liquidity protocols or other incentive pools. New tokens also hit a balance, remaining around 120M with constant token burns from fees. Rough estimates see the ETH supply as flat or deflationary, potentially shrinking by 1.36% annually. The exact deflation is not guaranteed, and ETH briefly went inflationary again in May.
The Ethereum main net may also lose its importance beyond a security layer. Fewer users need ETH for direct fees, instead choosing to use L2 tokens or various forms of off-chain computation. Avoiding the main net of Ethereum also means holding actual ETH may be reserved for project treasuries and exchanges, while most everyday transactions use off-chain and scalable solutions.
What is the next stop for ETH?
Earlier predictions for ETH saw the token rise to $10,000, based on utility and holding demand. The expectation is that ETH may track the trajectory of BTC and become a high-value asset with rare actual transactions.
Also read: How Many Ethereum Are There?
The big factor for ETH in June will be the accumulation for ETF launches. Expectations of an altcoin rally also boost the expectation that ETH will outperform in June.
From the current price levels, traders see ETH trying for $6,000 in the next few weeks. The coming days will see the first inflows of ETH into the vaults of ETF projects, which will also serve to gauge the interest.
The inflows to ETH fund will measure the readiness of mainstream markets to understand a new type of asset. Even with the current hype, interest in ETH may require some time. As of June 5, the Grayscale Ethereum Trust trades at a discount, or the equivalent of $3,500 ETH.
Predictions see inflows into ETH products as a fraction of Bitcoin’s inflows, reflecting more cautious interest.
However, ETF inflows can accelerate fast, as with Bitcoin’s products. At the beginning of June, Bitcoin products saw more than $900M in inflows in a single day.
The rise of ETH may also have a positive effect on a much wider ecosystem. An ETH rally to predicted ranges of $6,000 or even $8,000 will revive DeFi products and boost their native tokens. Ethereum carries multiple potential assets awaiting a breakout, from big platform tokens to its own collection of meme assets led by Pepe (PEPE).
Ethereum saw some outflows of funds in April as its price dipped under $3,000. The renewed market conditions and expectations of an altcoin market may speed up inflows as ETH enthusiasm returns.
Cryptopolitan reporting by Hristina Vasileva
