In a recent report, Markus Thielen, the head of research at Matrixport, a well-known crypto data analytics firm, argued that Ethereum (ETH) has the potential to experience a significant surge of more than 55%, reaching a price of $3,000. As the second most valuable cryptocurrency in the world, after Bitcoin (BTC), ETH powers the Ethereum layer-1 smart-contract-enabled blockchain and is widely used in the DeFi, NFT, and broader web3 industry.
Ether’s Breakout and Deflationary Trend
Thielen highlights that Ether has broken above its downtrend from the yearly highs and that Ethereum network activity has improved in recent weeks, leading to a deflationary trend in Ether supply. He provides a chart demonstrating Ether’s breakout above a pennant structure that it had been forming since late 2022. He also mentions that the revenues for the Ethereum ecosystem are increasing, signaling a potential tradeable bottom for ETH. In his analysis, Thielen states, “A tactical bullish trade could have merit for as long as weekly Ethereum fees stay above $30 million.”
Optimism for Ether’s Long-Term Value Proposition
The recovery in network fees indicates a higher ETH burn rate, contributing to the belief that Ether will remain a deflationary asset and enhance its long-term value proposition to investors. If Ether reaches the target price of $3,000 per token as suggested by Thielen, it would represent a surge of over 55% from its current price.
Amidst the dominance of Bitcoin over Ether in the market in recent weeks, there is optimism surrounding the potential approval of spot Bitcoin Exchange Traded Funds (ETFs). These approvals are expected to attract substantial capital inflows from the traditional finance industry. While the ETH/BTC exchange rate experienced a decline in October, it has recently rallied above its 21-day moving average, indicating a potential turnaround. Thielen also notes that Ether trading volumes are catching up to Bitcoin, which may support the view that altcoins could outperform.
In conclusion, if Thielen’s prediction of a near-term surge in the ETH price to $3,000 proves accurate, the ETH/BTC exchange rate could rise back towards resistance in the 0.058 area. However, if Bitcoin continues to lead the market rally and Ethereum network activity decreases, a retest of the 2022 lows under 0.05 remains a possibility.
