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The price of Ethereum (ETH) consolidated near $3,400 on Tuesday, and is set to close out the year with an approximate 50% return. Ethereum has had disappointing gains compared to Bitcoin and most altcoins ranked in the top 20 tokens by market cap.
The narrative could change in 2025 with catalysts like the upcoming Ethereum Upgrading and accumulation by institutional investors and other market drivers.
Ethereum is preparing for a Pectra upgrade in 2025
Ethereum could see a boost in scalability, security, and user experience with the upcoming Pectra upgrade, which is expected to launch in 2025. The upgrade will offer improvements in account abstraction, validations, and network performance.
The goal is to improve the user and developer experience on Ethereum and make it easier to implement future scalability upgrades.
Validator stake limits, staking withdrawals, and simplified smart contract development can improve the security and efficiency of the Ethereum network. 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 merger, and its successful implementation could serve as a catalyst for Ethereum’s recovery in 2025.
Ethereum analyst Anthony Sassano estimates that the Pectra upgrade will begin next March or April. It is worth noting that Unichain, an Ethereum-based protocol that is scheduled to launch its mainnet in early 2025, aims to use blobs, and Pectra’s improvements could help Ethereum meet Unichain’s scalability requirements.
Institutional investors accumulate ether during declines
On-chain data intelligence platform Santiment shows a steady increase in two key metrics: the supply held by the top non-exchange wallet addresses and the top token addresses as a percentage of total supply.
The increase in these metrics during November and December indicates that large portfolio investors are accumulating Ether.
Data from Lookonchain shows that entities such as World Liberty Financial, which is backed by Donald Trump, bought Ether tokens during declines in the price of ETH.
As the supply of Ether held by large entities outside exchanges increases, it signals whale accumulation, a typical bullish indicator for Ethereum.
US-based Spot Ethereum ETFs can pass on staking yield
While several U.S. ETFs have been approved by the SEC, none of them currently include staking yield. The regulator has backed away from 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 can benefit from accumulated rewards through increased net asset value, reduced management fees, and dividends.
A report from Bernstein Research indicates that under the crypto-friendly Trump administration, the SEC is likely to approve staking returns for Ethereum ETFs.
Higher adoption among enterprises, beyond the utility of the token
Dario Lo Buglio, CTO at Brickken, told Crypto.news in an exclusive interview:
“One thing people should remember about Ethereum, it not only has financial use cases like Bitcoin, it has smart contracts. It can be used to program applications and there has to be a balance between the value of Ethereum and its utility as a form of payment and decentralized applications.
I wouldn’t say there’s a lag in the price. What I think is lagging behind is active development. Because it is the largest decentralized blockchain, making changes takes time, unlike Solana and other protocols that can be upgraded without any hassle.
Lo Buglio remains optimistic about the adoption of Ethereum among enterprises for its smart contract functionality and underlying technology.
Technical analysis and objectives
Ethereum price was hovering around $3,400 on December 31. The coin is facing resistance at $3,497 and finding support in the fair value gap between $3,159 and $3,257. On the daily ETH/USDT price chart, technical indicators support the bullish outlook for Ether.
The RSI is reading 46 and sloping to the upside, indicating positive fundamental momentum. The moving average convergence divergence shows successively shorter chart bars, indicating that negative momentum is likely waning.
Traders should keep a close eye on any potential reversal in the Ethereum price trend.
Ethereum’s target is $4,500, with important psychological support at $3,000, as shown in the daily ETH/USDT price chart.
Disclosure: This article does not constitute investment advice. The content and materials contained on this page are for educational purposes only.
