The cryptocurrency market continues to grow and evolve, and 2024 is predicted by many investors to be the best year in history for the digital asset market. The ETH price chart is expected to show excellent performance over the next twelve months, with a bull run believed to be imminent. As a result, many people have started consolidating their portfolios as a means to support growth and revenue in the future.
ETFs
The first Bitcoin-backed ETF received the green light from the Securities and Exchange Commission on January 10th. This was the cumulated result of years of applications, which were either rejected or delayed. Many investors were expecting yet another postponement, but that was not the case, and the official endorsement of the asset class was announced. The news was well-received by investors, who expected a considerable price increase in the aftermath. The performance in the marketplace was modest, with gains on the lower side and even some losses.
However, many expect this to be a momentary thing, saying that growth is still very likely to occur. The reason for that is that ETFs are expected to attract retail and institutional investors. Since they typically possess a lot more capital to trade compared to the average investor, their engagement is expected to help the prices grow significantly. After the approval of the Bitcoin assets, many immediately turned their attention to Ethereum.
But is an Ethereum ETF likely to appear on the market soon? While some believe it is unlikely and that there will be many delays before approval, others are more optimistic and think that it’s entirely possible that an Ethereum exchange-traded fund will be approved with much less hassle, as the technology and infrastructure necessary to support them have already been implemented.
Upgrades
Spikes in the Ethereum price are typically recorded close to upgrades. The ecosystem is known for its propensity for innovation, with updates being quite frequent and offering a lot of new functionality, from better scalability to reduced emissions and faster transaction rates. The last bullish run was in 2022, during the Merge. Unfortunately, the adverse events that permeated the market during that year, most notably the collapse of several popular exchange platforms, caused prices to drop, and Ethereum finished the year with considerable losses.
Since the days of the Merge, approximately 0.2% of the total ETH supply has been burned, with the number set to increase over the next couple of months in light of mounting network usage. The Ethereum Improvement Proposal 4844, the following update on the platform, is set for later in 2024. After it is implemented, it will make layer 2 systems built around Ethereum approximately ten times faster. This is important because lagging speeds cause prices to mount as well, decreasing network engagement.
$3K
2023 has been much better for the Ethereum blockchain in terms of sustained growth, and although there was some stagnation as well and the prices plunged towards the end of summer, it was still considerably better than 2022. Now, investors are moving towards the $3,000 level. The last time Ethereum went above this level, it had a 46% correction, and many are apprehensive of history repeating itself. In February 2024, Ether accumulated over 21%.
The bullish momentum is seen as a direct result of the ETFs and their ability to drive inflow. However, Ether has several other drivers that could serve to bring its price further up. One of them is the Dencun upgrade, which is currently expected to arrive on March 13th, roughly a month before the next Bitcoin halving. This new feature will improve block space levels and reduce the gas fees for rollups. This means that DApp usage could increase, and smart contract deposits might get a boost.
Consolidation
Even if a certain price is within reach, that doesn’t mean investors will enjoy it for long. Since price points are so volatile and fluctuations are common in the digital finance world, users must be fast and make the most of what they have. Missing out on an opportunity typically means that you must wait for several months again. Historical data shows that sustaining a level above $3,000 has been difficult for Ethereum in the past.
Roughly three weeks before April 3rd, 2022, the Ethereum price skyrocketed to $3,580, an over 40% increase from its previous level at $2,250. Yet, the network was only able to support this level for a long time, and the price dropped by almost 50% over the next 40 days. Some wonder if the same thing could happen again, an undesirable outcome that could translate into losses for many. On February 10th, the futures premium went above the neutral threshold to reach 15%.
The change of just 5% is not excessive by any means but was still enough to convince investors that bullish movements require extra leverage after the $500 gains. Some analysts believe that the traders who are betting on a price increase could end up disappointed. The volatility presents a considerable risk for liquidations. Other metrics show that the scenario could be entirely different this time round and that it’s not sure if the exact price drop will occur this year.
Resistance
Between February 6th and February 20th, the Ethereum price surged by approximately 29.7%, arriving at the $3,000 resistance level. The gains are the result of decreased supply owing to the higher demand for staking. Decentralized finance and the burn mechanism enabled by the proof-of-stake enabled by the proof-of-stake system have contributed to the figures as well. Some analysts and researchers have also discussed the fact that ETH hasn’t seen the arrival of its demand season just yet.
This gives investors hope that they haven’t seen the coin’s best performance in 2024 yet and that the best is yet to come. Supply data shows that there was a considerable decline in the number of coins circulating, amounting to roughly 18,960 ETH.
The Ethereum crypto market has been going through several rollercoaster events during the past few years. 2023 was expected to be a year of constant growth, but investors now believe that it was nothing more than preparation for the gains of 2024.
