In a recent report, Markus Thielen, the head of research at the renowned crypto data analytics firm Matrixport, has suggested that Ether (ETH) could experience a substantial surge of more than 55% to reach $3,000.
Ether is the second most valuable cryptocurrency globally in terms of market capitalization, trailing only Bitcoin (BTC). It serves as the backbone for the Ethereum layer-1 smart-contract-enabled blockchain, which remains the most widely used blockchain in the DeFi (Decentralized Finance), NFT (Non-Fungible Token), and the broader web3 industry.
Thielen’s analysis, published on defiontarget.com, highlights that Ether seems to have broken free from its downtrend that extended from the yearly highs. Additionally, Thielen notes that Ethereum network activity has shown improvement in recent weeks, resulting in Ether’s supply becoming deflationary once again.
Thielen’s analysis also includes a chart that illustrates Ether breaking out of a pennant structure it had been forming since late 2022. This breakout suggests a potential bullish trend for Ether, possibly leading to the projected 55% surge to $3,000.
Additionally, Markus Thielen argued that “revenues for the Ethereum ecosystem are rebounding from historically low levels, potentially signaling a tradeable bottom for ETH.”
He pointed out that although revenues have only returned to the levels seen in the summer of 2023, around $30 million in weekly fees, the particularly low figure of just $12.1 million during the week of October 9 might now be in the past.
Thielen further suggested, “A tactical bullish trade could be justified as long as weekly Ethereum fees remain above $30 million.”
According to TokenTerminal, the Ethereum network generated approximately $36 million in fees just last week, indicating a recent increase in network activity and fees, aligning with Thielen’s analysis.
The increase in network fees implies a higher rate of ETH burn, as a significant portion of Ethereum network fees are burned.
Indeed, according to Glassnode, the Ether inflation rate recently reached its lowest level since August, at -1.2%, after being as high as 0.3% in early October. This trend should inspire optimism that, provided network activity remains robust, Ether is likely to remain a deflationary asset, bolstering its long-term appeal to investors.
Should Ether reach Markus Thielen’s target of $3,000 per token, it would represent a remarkable surge of over 55% from its current price, which is just below $1,900. This potential price increase is further underpinned by the positive developments in network fees and the reduced inflation rate of Ether.
Ether (ETH) to Outperform Bitcoin (BTC)?
In recent weeks, Bitcoin has seen an increase in its market dominance over Ether, primarily driven by the optimism surrounding the potential approval of spot Bitcoin Exchange Traded Funds (ETFs) in the United States. These ETFs are expected to attract significant capital inflows from the traditional finance industry.
Throughout most of 2023, Bitcoin had been experiencing a downward trend. However, it also gained support as a safe-haven asset, given its status as the oldest, most trusted, and arguably most decentralized cryptocurrency. The exchange rate between ETH and BTC experienced a rapid decline in October, reaching its lowest levels since June 2022.
Nevertheless, there has been a recent rally in this exchange rate, pushing it above its 21-day moving average (21DMA), which could be seen as a potential sign of a turnaround in Ether’s performance relative to Bitcoin.
Markus Thielen’s recent analysis also points out that Ether trading volumes are closing the gap with Bitcoin, which could potentially “support the view that altcoins might outperform.”
He notes that in mid-October, Bitcoin was trading as much as three times the volume of ETH, but this ratio has since decreased to just two times.
If Thielen’s projection of a potential near-term surge in the price of ETH to $3,000 materializes, then the ETH/BTC exchange rate could indeed rise back towards resistance in the 0.058 area in the near future.
However, the direction of the broader market rally remains significant. If Bitcoin continues to lead the market, driven by optimism about the upcoming spot Bitcoin ETFs, and Ethereum network activity declines once more, a retest of the 2022 lows under 0.05 for the ETH/BTC exchange rate could still be a possibility.