Ethereum (ETH) has experienced a steady upward trend in recent weeks, with its price rising by over 40% since early November. As of now, Ethereum is priced at approximately $3,373.69, and some analysts, including Scott Melker, host of The Wolf of All Streets Podcast, believe that ETH could reach a new milestone of $6,000 by the first quarter of 2025. Let’s break down the factors contributing to this optimistic price prediction.

Ethereum’s ‘Scarcity Mode’ Could Fuel Price Surge

One of the key reasons behind the bullish Ethereum forecast is what experts are calling the asset’s “Scarcity Mode.” Since the beginning of 2024, the Ethereum exchange reserve has been steadily declining. The exchange reserve is the amount of ETH held on centralized exchanges, and a drop in this metric suggests a tightening supply.

At the start of the year, Ethereum’s exchange reserve was around 20.5 million ETH. By its price peak in April, it had decreased to 19.7 million ETH, and by late August, it fell to a low of 18.6 million ETH. As of now, the reserve hovers around 19.1 million ETH.

This reduction in supply, coupled with rising demand for Ethereum, has triggered what experts view as a “scarcity effect.” According to basic economic principles, when an asset becomes scarce, its price is often driven higher due to increased demand.

Ethereum’s 2023 Bullish Pattern as a Precedent

Scott Melker is drawing parallels between the current Ethereum market and the bullish pattern observed in 2023. Early in 2023, Ethereum’s price was around $1,198, well below its 200-day moving average (SMA) of $1,386.69. However, Ethereum broke above this moving average in late January and remained well above it for the rest of the year, culminating in a price of $2,223.75 by December 31, significantly higher than its 200-day SMA of $1,861.91.

This year, Ethereum’s market has exhibited a similar pattern. Until late July, the price remained above the moving average line. However, after a price peak in March, Ethereum’s price gradually closed the gap with the SMA. On August 1, ETH dropped below the line but rebounded sharply on November 8. Now, Ethereum is trading at $3,405.25, well above its current 200-day SMA of $2,958.42.

Melker predicts that this upward momentum will continue, mirroring the trajectory seen last year. Given Ethereum’s strong position relative to the moving average and the rising institutional interest, a price of $6,000 by Q1 2025 seems increasingly plausible.

Institutional Interest and ETF Inflows Fuel Optimism

Institutional interest in Ethereum has also been on the rise, further supporting the price prediction. A recent influx of $132 million into Ethereum ETFs indicates growing confidence among institutional investors. The increasing presence of institutional investors is seen as a sign that Ethereum is being recognized as a mainstream asset and is expected to play a more significant role in the global financial ecosystem.

As more institutional money flows into Ethereum, the asset’s price is likely to rise due to both increased demand and greater market liquidity. Ethereum’s appeal among institutions is further bolstered by its role in decentralized finance (De Fi), non-fungible tokens (NFTs), and various blockchain applications.

A Favorable Market Environment for Ethereum

With Ethereum’s supply becoming more constrained due to the decrease in exchange reserves, coupled with rising institutional interest, the market environment for Ethereum appears favorable heading into 2025. Analysts predict that ETH will continue its strong upward momentum, potentially reaching $6,000 by Q1 2025, driven by these key factors.

Conclusion: Is $6,000 for Ethereum Realistic?

Given the current dynamics in the Ethereum market—declining supply, rising demand, strong institutional interest, and favorable technical indicators—it’s not hard to see why experts like Scott Melker are predicting Ethereum’s price could hit $6,000 by Q1 2025. The “scarcity mode” and the bullish trend in 2023 serve as strong precursors to even higher price levels.

However, it’s important to remember that cryptocurrency markets are volatile, and unexpected fluctuations can always occur. Nevertheless, the combination of these factors positions Ethereum for significant price growth, making the $6,000 target a real possibility for early 2025.