Author: Sze Lam; Source: Cryptonews

With Ethereum (ETH) price above $3,900 Consolidating, traders are eyeing a possible spike before the end of the year, a phenomenon known as the "Christmas run."

From a technical perspective, Ethereum is currently performing well, with the price sitting above all major moving averages and maintaining a clear upward trend.

However, the highs above approximately $4,000 in early 2024 formed resistance and are still limiting further breakthroughs in Ethereum prices.

However, for Ethereum investors, "Christmas" may come early.

Although Polymarket betting odds show that there is only a 14% chance that Ethereum price will break through the all-time high ($5,000) before the end of the year, this may be an underestimate. Potential for a strong breakout. Here are the reasons why:

Reasons why Ethereum price is about to soar to $5,000 Reason 1: Market atmosphere

To describe the current crypto market as "good atmosphere" may be an understatement . Especially against the backdrop that the new US president, who will take office in March next year, has shown strong support for the crypto industry.

Trump this week pledged to make significant contributions to the crypto industry, and his nominees for Treasury Secretary and Securities and Exchange Commission (SEC) Chairman are both staunch crypto enthusiasts supporter. In addition, his family has recently been found to have accumulated holdings of crypto assets such as ETH, AAVE and LINK. These signs inject strong bullish confidence into the market.

It is no exaggeration to say that we are standing On the threshold of a new era for crypto markets, the decisive positive turn in the United States marks the arrival of a “golden age.”

This trend is an important reason why buying pressure may remain high before the end of the year.The price of Ethereum is positive.

Reason Two: Market Leadership and ETF Inflows

The prospect that the United States may establish a new Bitcoin reserve suggests that Bitcoin (BTC) will become a Huge winner.

However, altcoins, such as Ethereum, which have been under pressure due to regulatory uncertainty in recent years, may usher in a more significant rebound.

Ethereum is expected to be one of the strongest performing altcoins. According to DeFi Llama data, even though it was surpassed by Solana in terms of speculative trading activity (thanks to its lower transaction fees), Ethereum still leads the market with 56% of the total DeFi lock-up volume (TVL) and continues to dominate the market. Centralized financial sector.

For new crypto investors looking to expand their investment horizons beyond Bitcoin, Ethereum is probably the most obvious choice.

This is particularly notable because Ethereum is one of the only major cryptoassets in the United States to launch a spot ETF.

According to data provided by The Block, capital inflows into Ethereum ETFs have continued to rise since Trump won the election, which further consolidated the market for Ethereum. Advantages.

< p>There is still room for further gains in Ethereum price before the end of the year, as there are no signs that the current positive trend will slow down. Reason 3: On-chain activity is heating up

Another reason to be bullish on Ethereum’s price is that activity on its blockchain is heating up rapidly.

According to Glassnode’s core data panel on the Ethereum chain, key indicators such as the number of active addresses, the number of transactions, and the total transfer volume have all shown an upward trend and are close to annual highs. This not only strengthens Ethereum’s adoption narrative, but also supports its price.

In addition, this further establishes the characteristics of Ethereum as a deflationary asset - the Ethereum burning mechanism will destroy part of the transaction fees (Gas fees), so the more active the activity, the more ETH will be destroyed. This in turn reduces the circulating supply and has a positive impact on prices.

How high can Ethereum rise?

The current price of Ethereum is close to historical highs, and investorsThere may be concerns that the best part of this rally is over. But this concern may be misplaced.

Similar to Bitcoin, Ethereum prices have historically been cyclical: periods of aggressive price discovery are often followed by sharp corrections and prolonged consolidation.

But for bulls, a new phase of price discovery may be imminent. Bitcoin entered a new round of price discovery last month, and historical data shows that Bitcoin will almost always usher in this stage within 8 months after the halving.

Ethereum often lags behind Bitcoin by up to two months. This means that Ethereum may usher in a strong breakthrough and set a new all-time high in January 2024.

On-chain data also supports the argument that it has not yet peaked - Ethereum's "realized market cap" (that is, the total market cap calculated by the average price of each coin's last move) just hit a new record, reaching nearly $248 billion. According to Glassnode data, the ratio of Ethereum's market capitalization to realized market capitalization is currently about 1.5, which is far lower than the level at previous market peaks (more than 3).

This shows that there is still a lot of room for upside in Ethereum prices, and the current market cycle may have just begun.

At the same time, although the profitability of the Ethereum market is higher, it is still below the levels of previous price peaks.

According to Glassnode data, Ethereum’s net unrealized profit/loss (NUPL) has recently been just above 0.5, while during previous market peaks, this indicator usually exceeded 0.75.

This shows that the current market still has the potential to rise further and has not yet reached historical overheating.

No one can give a definite answer to the question "How high can Ethereum go?" But what is certain is that the potential is still very high.

In the last cycle, the price of Ethereum rose to more than 4 times the previous historical high. If such gains occur again, Ethereum price could approach the $20,000 level.

While this goal sounds ambitious, given Ethereum’s historical performance and fundamental support, this possibility is not out of reach.