Crypto News- Ethereum, often dubbed the “sleeping tiger” in this year’s crypto rally, reached a notable peak of $2,700 on January 12, marking a 21-month high. However, it has struggled to breach that resistance in recent weeks.
Despite Bitcoin, its ‘big brother’ in the crypto sphere, soaring to a two-year high, many narratives suggest that Ethereum is merely biding its time before it springs to life.
Anticipated Surge in Ethereum: Analysts Point to Decreasing Supply and Rising Demand
Furthermore, an annual burning rate of 0.21% of the ETH supply is in effect, steadily reducing the circulating asset. Ultrasound. Money data indicates a decrease of 357,148 ETH since the Merge in September 2022, amounting to a staggering $947 million in supply reduction within just 18 months.
The imminent launch of Ethereum exchange-traded funds (ETFs) is expected to further restrict available supply, mirroring the trend seen with Bitcoin products that now absorb more coins daily than the network produces.
The upcoming deployment of EIP-4844 in March promises a significant reduction in layer-2 gas fees, potentially driving up adoption, usage, and transaction volumes.
Ethereum Awakens: The Bullish Case Amid Supply Constraints and Growing Demand
Impact3’s Kyle Reidhead aptly observes that the increasing demand coupled with the diminishing supply is a fundamental principle of economics, inevitably leading to price surges.
Other industry observers highlight additional factors such as the rise of restaking narratives through platforms like EigenLayer, and the increasing integration of Ethereum into traditional finance and decentralized applications (dApps) like Farcaster.
Furthermore, with Federal Reserve rate cuts making cash holdings less attractive, investors are turning to crypto assets offering higher yields, which could spell good news for Ethereum’s prospects.
Lastly, the potential resolution of Coinbase’s battle with the SEC alleviates concerns over regulatory uncertainties, fostering a more positive sentiment towards Ethereum and other crypto assets in the eyes of investors.