Ethereum: Large Catalysts To Drive The Next Leg Higher

Summary Ethereum's supply/demand dynamics support a higher ￰0￱ has multiple catalysts to drive demand higher over the long ￰1￱ technicals point to further upside for Ethereum in the current price ￰2￱ price moves may occur over the next few ￰3￱ USD ( ETH-USD ) has multiple large catalysts that are poised to drive long-term growth for the underlying price based on supply and demand dynamics. Ethereum's year-to-date price increase of 30% significantly outperformed the S&P 500's ( SPY ) 10% gain. Ethereum's technical outlook also supports another leg higher in the current price ￰4￱ Supply The price of anything comes down to the balance of supply and ￰5￱ Ethereum, the supply is being constrained due to multiple factors.

Technically, Ethereum doesn't have a finite supply the way Bitcoin USD ( BTC-USD ) is limited to 21 million coins ever to be mined. However, the supply of Ethereum is being lowered due to the dynamics of the ￰6￱ busy days, ETH is burning more in transaction fees than it issues to ￰7￱ is visible through on-chain ￰8￱ Money The chart above shows that Ethereum's supply peak occurred in 2022 at 120.5 million ￰9￱ supply has been decreasing slightly since then and is projected to continue to remain lower than the ￰10￱ fee burn is 2.8k ETH per day ￰11￱ issuance of 2.7k ETH per day. So, Ethereum is earning more in fees than it is paying out to validators in the form of ￰12￱ steady decline in the supply should help keep upward pressure on Ethereum's price as demand ￰13￱ ETFs as Catalysts Numerous Ethereum ETFs have been issued by various ￰14￱ is not just the existence of Ethereum ETFs that makes this a catalyst; the way the market uses them leads to higher ￰15￱ institutions, pension funds, endowments, insurers, and corporate treasuries were probably never going to purchase Ethereum the traditional way through hard ￰16￱ existence of Ethereum ETFs makes buying, holding, and selling the crypto as easy as stock ￰17￱ large entities that I mentioned continually look for places to earn money for their investment ￰18￱ top cryptocurrencies, such as Bitcoin and Ethereum, can be a part of ￰19￱ reason for that is the significant long-term outperformance of the top cryptocurrencies ￰20￱ investments such as equities and ￰21￱ purchasing of Ethereum from these large institutions should help drive demand for ETH, putting upward pressure on the ￰22￱ Coins Recent legislation as part of the GENIUS Act paves the way for the United States to become the global leader in digital ￰23￱ legislation creates a Federal regulatory system for ￰24￱ GENIUS Act ensures the stability and trust of stablecoins through strong reserve ￰25￱ legislation requires 100% backing for the stablecoins with short-term Treasuries or ￰26￱ are required to make monthly public disclosures of what is comprised of the ￰27￱ idea behind creating support for stablecoins is to help drive the demand for ￰28￱ to ensure the global dominance of the ￰29￱ as the global reserve ￰30￱ stablecoins are built on the Ethereum Blockchain, which is the reason why this is bullish for ￰31￱ have grown into a $280 billion market , with about $147 billion of that on ￰32￱ industry pundits, such as VanEck's CEO Jan van Eck, Bitmine Chairman Tom Lee, and BitMEX co-founder Arthur Hayes, are bullish on Ethereum as a ￰33￱ and other financial institutions will issue and/or need to have a way to accept ￰34￱ is what can make this happen.

Ethereum's Advantage Ethereum's competitive advantage is its technical standard known as the Ethereum Virtual Machine ￰35￱ is what powers smart contracts on the Ethereum ￰36￱ EVM is like a virtual computer that everyone in the world can ￰37￱ EVM is distributed and secured by the ￰38￱ contracts are executed on the ￰39￱ smart contracts can include financial transactions (automated payments, document verification), real estate, insurance, secure sharing of patient data in healthcare, legal contracts, and ￰40￱ are set up as smart contracts and executed by the EVM to process ￰41￱ Treasury Companies Another catalyst for Ethereum is the emergence of Ethereum treasury companies.

We've seen Strategy ( MSTR ) essentially operate as a bitcoin treasury company (buying large quantities of bitcoin as an investment). Companies such as Bitmine Immersion Technologies ( BMNR ) and SharpLink Gaming ( SBET ) have been doing something similar with ￰42￱ advantage that Ethereum treasury companies have with ETH over bitcoin is that they can earn money from ￰43￱ is similar to earning dividends while holding ￰44￱ amount earned from staking varies based on various factors such as the amount of ETH staked, the amount of active validators, the demand for Ethereum transactions, etc. Currently, the annual rate to stake Ethereum is 1.86% . The annual rate was over 4% in August ￰45￱ existence of Ethereum treasury companies should add to the total demand for ETH, putting upward pressure on the ￰46￱ Perspective Ethereum (ETH-USD) Monthly Price Chart w/ RSI & MACD (TradingView) Ethereum's monthly chart above shows that the peak in each cycle occurred after the price increased into deep overbought territory above 80 on the ￰47￱ good news is that the RSI is currently below the overbought level at about ￰48￱ is in bullish territory above the 50 ￰49￱ MACD is also bullish as the blue line crossed above the red signal line and the histogram bars turned from red/pink to ￰50￱ shows that ETH is in a positive uptrend on the long-term monthly ￰51￱ price can be volatile, and ETH is experiencing a pullback from the all-time high price of $4,954.

If this cycle is consistent with the previous two cycles, the price of Ethereum has more room to move ￰52￱ could see the RSI move deep into overbought territory near the peak of this price cycle. Ethereum's price cycles tend to correlate well with bitcoin's price cycles. Bitcoin's last two price cycles lasted 1,064 days from the bottom to the ￰53￱ this cycle lasts about the same time, bitcoin's price would peak around October ￰54￱ course, there is no guarantee that this cycle will last exactly as long as the past two ￰55￱ does tend to be a strong upward move at the very end of each price cycle. I don't think we've experienced that blow-off top yet in this cycle since the RSI didn't move deep into overbought territory ￰56￱ for the Investment Thesis It is possible that the price peak already occurred for this price ￰57￱ is no guarantee that the current price cycle will last as long as the previous ￰58￱ is also possible that ETH may not move deep into the overbought area during this current ￰59￱ price of Ethereum is highly ￰60￱ price can drop 80% to 90% from the price peaks to the price bottoms over the course of each major price cycle.

So, investors may wish to use technical analysis on the monthly chart to pick buy and sell points to maximize ￰61￱ could be another risk for ￰62￱ smart contract blockchains such as Avalanche ( AVAX-USD ), Solana ( SOL-USD ), Cardano ( ADA-USD ), ￰63￱ develop features that are more attractive than ￰64￱ is possible that one or more competitors could catch on and overtake Ethereum as the smart contract blockchain ￰65￱ could have a negative impact on Ethereum's price. Ethereum's Outlook The supply and demand dynamics look positive for Ethereum over the long term. However, it is important to keep a close eye on the technicals since a sharp move deep into overbought territory on the RSI on the monthly chart is typically followed by a significant drop of over 80% from the price peak.

Therefore, profit-taking would be wise near the peak of the price ￰66￱ conservative price target for this price cycle is $7,500. This is at the Fibonacci extension level of ￰67￱ more aggressive price target is at the 3.618 Fibonacci level for a possible ETH price of $15.650. Ethereum did hit the 3.618 Fibonacci level in the last price ￰68￱ should keep a close eye on Ethereum's price action over the next few months to have an exit strategy before the next bear market begins.