Ethereum’s price recently shot up to about $4,573, which is more than 100% since 2022. Now, experts are weighing in on the possibility of ETH reaching $10,000 because of this upward trend. The M2 money supply, which is now at an all-time high of about $22.2 trillion, is a major factor being looked at.
According to research done by XWIN Research, in the past, when the money supply went up, asset prices, including those of cryptocurrencies, went up as well. When liquidity rises, investors often look for assets that can give them better returns.
Bitcoin was the first to show this experience of this type of liquidity. Since 2022, it has gone up more than 130%, and it has a very high correlation with M2 of about 0.9. On the other hand, Ethereum has only gone up about 15% in the same time. This gap is a clear sign of a liquidity lag. The recent study shows that the gap may be getting smaller.
Analysts have also observed a drop in selling pressure as the amount of ETH in exchange reserves has been reduced to about 16.1 million, which is more than 25% lower than it was in 2022. At the same time Netflows to exchanges have remained negative as more and more ETH are being transferred to staking contracts or self custody wallets.
However, experts emphasize that while the growing M2 money supply could increase ETH’s price, factors such as market sentiment, new laws, and advancements in technology on the Ethereum network will also play a crucial role in determining its future price. Last month, Ethereum had a difficult time maintaining stability when it was facing resistance at $4,800.
In conclusion, analysts feel that the growing M2 money supply may push Ethereum’s price up, but it will take a combination of factors, such as how investors act, market conditions, and changes in the Ethereum ecosystem, for the price to reach $10,000.
Also Read: BNB Breaks $1,200 as Shorts Face $5M in Liquidations
