Ethereum (ETH) consolidated near $3,400 on Tuesday, poised to close the year with an approximate 50% return. Ethereum has yielded underwhelming gains compared to Bitcoin and most altcoins ranked in the top 20 tokens by market capitalization
The narrative could change in 2025 with catalysts like the upcoming Ethereum upgrade, accumulation by institutional investors, and other market movers.
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Ethereum gears for Pectra upgrade in 2025
Ethereum could see a boost in scalability, security, and user experience with the upcoming Pectra upgrade, expected to go live in 2025. The upgrade will introduce enhancements in account abstraction, validator operations, and network performance.
The goal is to improve both the user and developer experience on Ethereum and make future scalability upgrades easier to implement.
Validator stake limits, staking withdrawals, and streamlined smart contract development could improve Ethereum’s network security and efficiency. This could have a domino effect on Layer 2 chains that rely on Ethereum for their security infrastructure.
Pectra will be the third most significant upgrade in the Ethereum ecosystem after the Merge, and its successful execution could act as a catalyst for Ether’s recovery in 2025.
Ethereum analyst Anthony Sassano estimates that the Pectra upgrade will go live next March or April. Notably, Unichain, an Ethereum-based protocol, set to launch its mainnet in early 2025, aims to use blobs, and Pectra’s improvements could help Ethereum meet Unichain’s scalability requirements.
We’re getting a blob increase to 6/9 from 3/6 with Pectra in March/April (my estimate).
Unichain is slated to launch their mainnet in early 2025 and they’ll be using blobs.
The demand for blobs is up only and Ethereum will scale to meet this demand!
— sassal.eth/acc 🦇🔊 (@sassal0x) December 31, 2024
Institutional investors accumulate Ether during dips
On-chain data intelligence platform Santiment shows a consistent increase in two key metrics: supply held by top non-exchange wallet addresses and the token’s top addresses as a percentage of total supply.
An increase in these metrics during November and December indicates that large wallet investors are accumulating Ether.
Ethereum supply held by top non-exchange addresses and supply held by top addresses | Source: Santiment
Data from Lookonchain shows entities like World Liberty Financial, backed by Donald Trump, have bought Ether tokens during the dips in ETH price.
As the supply of Ether held by large entities outside exchange platforms increases, it signals whale accumulation, a typically bullish indicator for ETH.
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US based Spot Ethereum ETFs could pass on staking yield
While several U.S.-based spot Ethereum ETFs have been approved by the SEC, none currently include yield from staking. The regulator has pushed back on all ETF proposals including staking, unlike those in Switzerland and Canada.
Pro-crypto regulations under President-elect Donald Trump could pave the way for investors to increase returns through ETH staking rewards. ETF issuers could benefit from staking rewards via an increased NAV, reduced management fees, and dividends.
A report by Bernstein Research suggests that under a crypto-friendly Trump administration, the SEC is likely to approve staking yield for Ethereum ETFs.
Bernstein Research comments on Ethereum ETF | Source: Bernsteinresearch
Higher adoption among institutions, outside of token utility
Dario Lo Buglio, CTO at Brickken, told Crypto.news in an exclusive interview:
“There is one thing people should remember about Ethereum, it not only has financial use cases like Bitcoin, it has smart contracts. It can be used for programming applications and there must be a balance between Ethereum value and its utility as a form of payment and decentralized applications.
I wouldn’t say there is a lag in price. What I think there is a lag in, is active development. And it is because it is the largest decentralized blockchain so it takes time to make changes, unlike Solana and other protocols that can be upgraded with no hassles.”
Lo Buglio remains optimistic about Ethereum’s adoption among institutions for its smart contract functionality and underlying technology.
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Technical analysis and targets
Ethereum hovered around $3,400 on Dec. 31. The coin faces resistance at $3,497 and finds support in the fair value gap between $3,159 and $3,257. On the ETH/USDT daily price chart, technical indicators support a bullish outlook for Ether.
Relative strength index reads 46 and slopes upward, indicating positive underlying momentum. The Moving average convergence divergence shows consecutively shorter histogram bars, suggesting that negative momentum is likely waning.
Traders should watch closely for a potential reversal in Ethereum’s price trend.
ETH/USDT daily price chart | Source: Crypto.news
The target for Ether is $4,500, with psychologically important support at $3,000, as shown on the ETH/USDT daily price chart.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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