3 Signals Predicting Ethereum (ETH) Price to Reach $5K in June

Yashu Gola
Updated: Jun 6, 2024, 09:45 GMT+00:00

Key Points:

  • Ether reserves on exchanges have dropped to their lowest point since 2016
  • The ETH/USD pair is forming a classic bull pennant pattern.
  • Significant inflows into ETH-based products and multiple Ether ETF applications signal renewed optimism and strong price growth prospects.
Ethereum coin. FX Empire

In this article:

The Ethereum blockchain’s native crypto, Ether (ETH), is showing extreme potential to reach $5,000 by June’s end, per a mix of technical, on-chain, and fundamental indicators. Let’s discuss these bullish catalysts in detail.

ETH On Chain Analysis: HODLing Sentiment on Rise Against Negative Supply Rate

Ethereum traders are increasingly withdrawing their Ether holdings from crypto exchanges. This shift in behavior, as revealed by on-chain data resource Glassnode, is a clear indication of growing HODLing sentiment. As of June 5, the total Ether reserves across all the crypto exchanges was over 12.59 million ETH, the lowest since July 2016.

Ethereum balance across all crypto exchanges. Source: Glassnode

There’s a direct correlation between the ETH balance on exchanges and its price. When the balance decreases, it often leads to an increase in the price, and vice versa. This market dynamic was particularly evident from mid-January to mid-March, where a decrease in exchange balances coincided with an increase in the price of Ether, providing a clear illustration of this relationship.

Moving Ether off exchanges signals bullish sentiment among investors. They are holding their ETH for longer periods or staking it for rewards rather than trading it. This effectively reduces their circulating supply against rising demand, a correlation that has been observed in the past where a decrease in exchange balances coincided with an increase in the price of Ether.

Other on-chain indicators illustrate the aforementioned supply-demand dynamic. For instance, as of June 6, Ether’s supply growth rate was -0.71% per year when measured from the day Ethereum merged from a proof-of-work to a proof-of-stake consensus mechanism in 2022, according to data resource UltraSound Money.

Ether’s supply rate since the Ethereum Merge. Source: UltraSound.Money

Significantly, the Ethereum ecosystem has experienced a nearly ninefold surge in daily active users over the past four years. This data from crypto ETF issuer Bitwise demonstrates a robust and growing user base, with Ethereum and it’s scaling solutions Arbitrum and Polygon averaging over 250,000 daily active users in Q1 2020, primarily from the Ethereum layer-1 mainnet. This growth is a strong indicator of the increasing demand and adoption of Ethereum, which bodes well for its future price potential.

Average daily Ethereum ecosystem users. Source: Bitwise

These indicators increase Ether’s potential to reach $5,000 by June’s end — and even beyond.

ETH Technical Analysis: A Classic Bullish Continuation Setup Formation is Underway

From a technical standpoint, Ether is forming a bull pennant pattern characterized by its price fluctuating inside a symmetrical triangle-like pattern following a sharp move upside. This consolidation trend accompanies lower trading volumes.

As a rule of technical analysis, Bull Pennants resolve after the price breaks above their upper trendlines and rises by as much as the height of the previous uptrend (also known as flagpole).

ETH/USD four-hour price chart. Source: TradingView

Applying the same technical rule on the ETH/USD four-hour chart increases Ether’s potential to undergo a breakout by mid-June, following a sharp rise toward $5,000 by the month’s end.

Ether Fundamental Analysis: Institutional Inflows Pick Momentum

New data from CoinShares reveals a significant surge in institutional investment in Ethereum.

Last week, ETH-based products saw inflows of $33.5 million, bringing the monthly total to $21.6 million and flipping the yearly inflows to $11 million. This marks the second consecutive week of positive flows, a key turnaround from the previous week’s $35.5 million outflow.

Crypto funds net flow by asset. Source: CoinShares

Earlier negative sentiment, driven by fears of spot Ether ETF rejections, had caused monthly outflows to reach $11 million. However, with the U.S. Securities and Exchange Commission (SEC) now accepting multiple Ether ETF applications, institutional investors are showing renewed optimism for price growth.

This mirrors Bitcoin’s situation ahead of its ETF approvals and launches in January, reinforcing the potential for Ethereum to reach $5,000 in the coming weeks.

About the Author

Yashu Gola is a journalist focusing on cryptocurrency markets since 2014. He writes for Cointelegraph and CoinChapter and has previously served as the chief editor for NewsBTC.