Eugene Investment & Securities: "Ethereum Doubles in Two Months…Expecting Long-Term Bullish Trend Due to ETF and Demand Growth"

A positive analysis on Ethereum (ETH) has emerged. It is forecast that the long-term uptrend will continue, driven by a combination of three major factors: increased on-chain transaction activity, reduced supply, and the inflow of institutional investors.

According to a report by Eugene Investment & Securities on the 4th, Ethereum price reached an annual high of $3,941 at the end of July. This figure more than doubled in just three months from the $1,800 level in early May.

Jo Tae-na, a researcher at Eugene Investment & Securities, stated in the report, "With the growth of stablecoin (virtual assets pegged to fiat currency) transactions, the activation of non-fungible tokens (NFTs) and DeFi, as well as other decentralized applications, both daily transaction volume and gas fees have hit all-time highs," adding, "The user base is expanding, which is strengthening the fundamentals of the Ethereum network."

Stable Fees Amid Increasing On-Chain Traffic…Steady Institutional Interest

The report specifically spotlighted on-chain transaction volume. Researcher Jo remarked, "Daily transaction count on the Ethereum chain has recently exceeded 1.6 million, and the number of active wallets has surpassed 500,000. Especially, transactions involving major stablecoins like Tether (USDT) and USDC have surged, pushing network activity to its peak and dramatically increasing fee revenue."

She added, "Previously, surges in transactions spiked fees and negatively impacted user experience, but recently, network structure improvements and enhanced scalability have stabilized gas fees. The average Ethereum remittance fee is now below $0.15, a significant drop compared to its 2021 peak."

Another factor cited for the price increase is the change in supply. Researcher Jo analyzed, "Through the 2022 Merge upgrade, Ethereum transitioned from Proof-of-Work (PoW) to Proof-of-Stake (PoS), reducing the annual supply growth rate from the previous 4% to below 0.5%."

She continued, "Under the EIP-1559 policy adopted in 2021, a cumulative total of 5.3 million Ethereum has been burned as fees—about 5% of the total supply. Additionally, more than 35 million ETH has been staked, further limiting circulation and increasing price scarcity."

The report also pointed out that movements by institutional investors are providing additional momentum for price increases.

Researcher Jo noted, "During July alone, $11.2 billion flowed into Ethereum-related Exchange Traded Funds (ETFs), outpacing Bitcoin in the same period."

Corporations stockpiling Ethereum are also continuing active investments. According to Researcher Jo, "SharpLink, led by Ethereum co-founder Joseph Lubin, purchased 77,210 Ethereum (approximately $295 million) on-chain over two days at the end of July," noting, "this amount exceeds the estimated newly issued Ethereum for the same month (around 72,800)."

Overheating Concerns Exist…"Possible Short-Term Correction, No Impact on Long-Term Uptrend"

However, the report detected signs of overheating in the short-term. Researcher Jo reported, "From a technical perspective, the Relative Strength Index (RSI) surpassed 70, entering the overbought zone, and as a result, there was a brief 4% price correction at the end of July."

Yet the long-term outlook remains bullish. She added, "While a short-term correction is possible, overall network fundamentals and improvements in the supply-demand structure support a long-term bullish outlook. The network's competitiveness will continue to strengthen through Layer 2 expansion and protocol upgrades."