ETH To $5K Hinges On Improvement In Global Macro

Key takeaways:

• Ether struggles to gain bullish momentum despite S&P 500 gains and spot Ethereum ETF inflows.

• Institutional accumulation continues, but network activity declines, leaving $5,000 ETH target uncertain.

Ether (ETH) has traded within a narrow $4,200 to $4,500 range for the past two weeks, a consolidation period following its brief encounter with the $4,956 all-time high on Aug. 24. Ether traders are now assessing the likelihood of further bullish momentum as the S&P 500 reached an all-time high on Thursday after weaker-than-expected US labor market data.

Ether futures are currently trading at a 5% premium relative to standard ETH spot markets, reflecting low demand from buyers using leverage. In neutral market conditions, futures premiums generally range between 5% and 10% to reflect the longer settlement period. More concerningly, even the rally above $4,800 in August did not manage to instill sustained bullish sentiment among traders.

The bearish trend in Ether derivatives coincided with 10 consecutive days of net outflows from Ethereum spot exchange-traded funds (ETFs) that lasted until Monday. The trend reversal, followed by $216 million in ETF net inflows on Tuesday and Wednesday, did little to generate lasting bullish momentum, leaving traders questioning whether a $5,000 ETH price target remains realistic for 2025.

Part of Ether investors’ disappointment can be attributed to the decline in Ethereum network fees, although this issue has affected the entire cryptocurrency market.

Ethereum chain fees totaled $42 million over 30 days, down 7% from the previous month. By comparison, fees on Tron dropped 12%, and Solana experienced a 2% decline. The number of active addresses on Ethereum’s base layer remained flat, while layer-2 solutions such as Base, Arbitrum, and Polygon saw significant declines.

Related: Spot ETH ETFs bleed $1B in 6-day outflow streak as rate-cut optimism fades

Institutions keep buying Ether despite declining onchain activity

Despite lower onchain activity, institutional investors continue to add positions aimed at long-term reserves. Bitmine Immersion Tech (BMNR) added 202,500 ETH to its balance sheets in the past seven days, according to Strategic ETH Reserve data, valued at over $880 million. The US-listed investment vehicle now holds more than $9.1 billion in Ether.

Recent gains in the S&P 500 index do not necessarily indicate positive expectations for the broader economy. Traders have grown more confident that the US Federal Reserve will be forced to cut interest rates after initial claims for unemployment benefits reached their highest level since October 2021.

The stock market increasingly behaves more like gold than a traditional risk-on asset, offering dividends and buybacks based on earnings, while cryptocurrencies such as Ether remain riskier amid the fear of economic slowdown. Consequently, the path to a $5,000 Ether price largely depends on lower macroeconomic uncertainty.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.