3 Factors Fueling Ethereum’s Potential Surge to $4,000

• Ethereum reaches a new year-to-date high of $3,822, marking significant growth.
• Reduced ETH supply on exchanges and increased staking contribute to bullish sentiments.

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has soared to a new year-to-date peak, reaching $3,822 on March 5.

This marks a significant 8% upswing over the past 24 hours and a 15% increase over the preceding week, showcasing a robust bullish momentum in the crypto sphere. Over the last six months, Ethereum has witnessed an extraordinary surge, escalating by 132%, drawing increased investor attention and market optimism.

Despite the recent rally, Ethereum’s current price hovers around $3,796, which is approximately 28% below its all-time high of $4,891, recorded on November 26, 2021, but it has rose by 16.13% the last 7 days. This gap highlights the potential room for growth and the anticipation building up in the Ethereum community and among investors.

The rally is complemented by a significant 68% leap in daily trading volume, which now stands at a whopping $33.29 billion. This upsurge not only underscores the growing investor interest but also solidifies Ethereum’s position with a formidable market capitalization of $453 billion, according to data from CoinMarketCap.

3 Factors Fueling Ethereum Potential Surge to $4,000

The uptrend is not solely reflective of the broader crypto market’s positive sentiment, driven by factors such as increased inflows into spot Bitcoin ETFs and the upcoming Bitcoin supply halving. Ethereum’s ascent is also supported by several fundamental factors and on-chain metrics, indicating a healthy and growing ecosystem.

Reducing Supply on Exchanges

One of the pivotal factors buoying Ethereum’s price is the diminishing supply of ETH on exchanges. Data from Glassnode reveals a 20-month low in ETH balances on exchanges, around 13.14 million tokens, pointing to a decline in selling pressure and an increase in holding behavior among investors.

This trend is further evidenced by a noticeable uptick in accumulation by large holders, with wallets containing $100,000 or more in ETH increasing significantly since February. It has raise from 94,620 at the beginning of this year to 141, 406 on March 4.

Staking and Liquidity Protocols

Another contributing factor to the reduced ETH supply is the rising number of Ether staked on the Beacon Chain. With over $31.58 million ETH, worth $119.8 billion, currently staked, a significant portion of ETH supply is locked, around 26.3% tokens, reducing the tokens available for trading.

Liquid staking solutions like Lido, Rocket Pool, and EtherFi have further facilitated this trend, allowing for smaller amounts, less than 32 ETH, to be staked and used as collateral in DeFi, thereby enhancing the Ethereum ecosystem’s liquidity and stability.

Futures Market Dynamics

The increased demand for Ethereum was also reflected in the futures market, with open interest in ETH futures contracts reaching $11.98 billion, nearing its 2021 high of $13 billion.

This surge suggests a growing appetite for leveraged positions in Ethereum, indicating confidence among traders and investors in Ethereum’s future trajectory.

CNF previously reported that, an expert analyst has seen a 17x growth potential for Ether by 2033, sticking to its blockchain features and popularity among investors.