Up to August 2024, eth price in usd was $2,800, 180% higher than 2023 low at $1,000, but $5,000 still short by a 78.6% surge. Based on historical figures, Ethereum’s high was $4,891 in November 2021 (source: CoinGecko). For attaining a rise equally noteworthy, there are several prerequisites: The market capitalization must grow to 600 billion US dollars from today’s figure of 336 billion US dollars (over that of Visa, 530 billion US dollars) and the volume of trading must increase to 20 billion US dollars per day from 8 billion US dollars (150% increase). According to Bloomberg’s Q2 2024 report, the probability of cracking the $5,000 mark is 28%, and the following are the key conditions that must be met at the same time.
Technology upgrade and adoption rate: Since the “Dencun Upgrade” of Ethereum in March 2024, Layer2 transaction fees fell 90% and average daily volume handled increased from 3 million to 12 million (data source: L2Beat). If adoption in Layer2 at a quarterly level of 35% (currently 25%) increases on-chain activity in Q1 2025 to drive demand for ETH higher. In its latest estimates, Coinbase believes that expanding the staking ratio from its current 23% (32 million ETH) level to 35% will decrease circulation by 12% or elevate the price by 40%.
Regulatory and institutional funds: In May 2024, the US SEC approved BlackRock’s Ethereum Spot ETF, with a net inflow of 1.8 billion US dollars for the first week (0.54% of the ETH circulating volume). If the institutional holding ratio is able to achieve 25% of the Bitcoin ETF (the BTC ETF holding can be up to 4.2% of the circulating volume), it requires a net inflow of 15 billion US dollars, which can push the eth to usd to 3,800 US dollars. However, the final call by the SEC on ETH’s security status (Q4 2024) remains a risk factor – if ETH is viewed as a security, its price could plummet to $1,500 (jpmorgan Chase model).
Macroeconomics and market cycles: The Federal Reserve’s 2024 cycle of interest rate reductions (cumulative rate reduction of 75 basis points anticipated) has driven the total market capitalization of the crypto universe from 2.2 trillion US dollars to 3.5 trillion US dollars (+59%). ETH needs to capture 17% of the value of money inflow (59.5 billion US dollars) to hit the target. Historical correlation indicates that the 30-day correlation coefficient of ETH and Nasdaq 100 Index is 0.62. Technology stocks increasing by 20% will see ETH possibly increase by 12.4%.
On-chain data and whale activity: Addresses with over 10,000 ETH will be up 12% in 2024 (1,152 currently), accounting for 42% of holdings. When such addresses stopped selling (with a net outflow of 1.8 million ETH in Q2 2024), price support would be significantly increased. The MVRV ratio (market capitalization/realized value) of ETH, according to the Glassnode model, is 1.8, which is under the bull market value of 2.5, and therefore there is still some room for valuation to rise.
Derivatives market signal: The March 2025 $5,000 call option open interest on the Deribit exchange has reached 230,000 ETH (nominal value of $1.15 billion), which indicates that there are some speculators anticipating a breakout. Be cautious, though. The point of liquidation for leveraged longs is concentrated in the $3,200- $3,500 range (with a liquidation size of $3.5 billion). Should there be a sudden increase in price, it may trigger a gradual correction.
Risks and Bottlenecks: In spite of the popularization of Layer2, Ethereum’s Gas fee still stands at $0.05 (500 times that of Solana’s $0.0001), and the user experience bottleneck can limit the explosive growth of DApps. Even though the proportion of competitors in TVL rises from 18% to 30%, the premium logic of ETH will still be in jeopardy. Furthermore, the unlocking of circulating tokens of new Layer2 like Starknet (1.2 billion tokens to be unlocked in September 2024) can divert funds.
in short, in order for eth to usd to break above $5,000, the following must be achieved simultaneously: a consistent flow of monies from institutional ETFs (some $1.5 billion each month), a 75 basis point Federal Reserve rate cut, and an ETH staking level of over 30%. A more realistic objective in the nearer term (2024) would be $3,500- $4,000. Investors are advised to construct positions in batches at $2,600- $2,800, place the stop-loss at $2,400 (the 200-week moving average), and build positions to the target of $4,500 after piercing through $3,200.