Main Points：
- Polymarket Prediction: Probability of ETH reaching $5,000 by year-end is less than 20%.
- Current Price Levels: Trading at $3,830, 27% below its all-time high of $4,878.
- Market Sentiment: Optimistic traders aim for $5,000, citing strong institutional interest and ETF inflows.
- Supply and Demand Dynamics: Rising deflationary pressure due to increased transaction fees and ETH burns.
- Network Growth: Significant increases in daily transactions and smart contract calls.
- Challenges: Continued ETH sales by the Ethereum Foundation may suppress price momentum.
Subtitles and Detailed Analysis
Polymarket Predictions and Current Sentiments
Polymarket, a decentralized prediction platform, estimates the chance of Ethereum (ETH) reaching $5,000 by the end of 2024 at approximately 16%. This marks a decline from its December 7 peak of 32%, reflecting dampened optimism amidst market fluctuations. Despite this, bullish traders like CoinMamba remain firm in their $5,000 target, buoyed by institutional activities and Ethereum ETF inflows.
Current Price and Historical Context
Ethereum is trading at $3,830, about 27% below its 2021 peak of $4,878. While the market remains cautious, several analysts highlight its potential to climb further given supportive market conditions, including a growing deflationary trend and increasing demand for blockchain utility.
Ethereum ETF Inflows: A Key Bullish Driver
December 10 data shows Ethereum ETFs experiencing 12 consecutive days of inflows, totaling $360 million. These investments underscore growing institutional interest. Analysts believe such sustained inflows could lead to a “supply-side crisis,” as noted by Ethereum developer Eric Conner.
Supply Dynamics: Burn Mechanisms and Deflationary Pressure
Since September 2023, Ethereum has seen accelerated ETH burning due to heightened network activity and transaction fees. This has tempered the growth in total supply, which stood at 120.44 million ETH as of April 2023. These deflationary pressures could push prices higher if demand sustains or increases.
Network Activity and Growth
Ethereum’s network activity in 2024 has surpassed 2023 levels, with daily transactions rising to 6.5–7.5 million, compared to 5 million last year. Similarly, smart contract calls now average 6–7 million per day, up from 5 million in 2023. This surge has significantly contributed to ETH burns and reflects growing utility across decentralized applications (dApps).
Ethereum Foundation Sales: A Potential Dampener
The Ethereum Foundation sold 100 ETH on December 10, bringing its 2024 total to 4,466 ETH. While these sales are minor compared to Ethereum’s market capitalization, they could introduce resistance to price appreciation if continued in significant volumes.
Market Outlook and Price Potential
Cryptoquant’s analysis suggests that, barring unexpected changes in demand-supply dynamics, ETH could surpass $5,000. Its estimated “realized price” (the average purchase price of ETH holders) points to an upper limit of $5,200. However, this is contingent on sustained investor confidence and minimal adverse market developments.
Optimism Amid Challenges
Ethereum’s journey toward $5,000 by year-end is marked by optimism from traders and robust network growth. Institutional interest, evidenced by ETF inflows, adds to its bullish case. However, challenges such as Ethereum Foundation sales and market volatility temper the outlook. While a 5,000-dollar milestone remains plausible, achieving it will require continued positive momentum and resilience against external pressures.
