Ethereum has gained more than 75% year-to-date (YTD) and is currently trading at the $1,900 price level, firmly rejecting the $1,200 lows from the start of the year. With a bullish boost permeating the markets as of late, crypto investors are now hopeful the second-largest cryptocurrency will break the multi-month resistance at $2,000 and possibly climb higher in the second half of the year.
While the short-term outlook for Ethereum certainly seems promising, many holders are wondering what to expect in the long term. There are several potential growth catalysts that could help propel the price of Ethereum beyond its current all-time high (ATH), including the 2024 Bitcoin halving and the growing deflationary pressure that started mounting after the leading smart-contract platform transitioned from the Proof-of-Work (PoW) to the energy-efficient Proof-of-Stake (PoS) consensus system last September.
In this article, we’re going to examine various Ethereum growth catalysts and consult the Ethereum Rainbow Chart to see what Ethereum’s price might be at the end of 2025.
“HODL!” – The Ethereum Rainbow Chart predicts the price of ETH will increase in the short term
What is Ethereum Rainbow Chart?
The chart offers insights into potential price targets for Ethereum based on historical trends. It allows investors to visualize the areas where ETH has historically encountered resistance or support, indicating potential price ceilings and floors.
At the moment, the Rainbow Chart suggests that Ethereum is in the “HODL!” band (indicated by yellow), which means that now might be a good time to invest in ETH as the price is likely to increase from here.
The Ethereum Rainbow Chart prediction for 2025
According to the Ethereum Rainbow Chart, ETH could reach as high as $28,768 by the end of 2025. Meanwhile, the chart forecasts that the lower bound for ETH in the same time period could be roughly $865.
Accounting for all seven price bands, the chart predicts an average price of $8,836 for the end of 2025, about 365% above the current price of $1,900 and 156% above the November 2021 ATH of $4,867.
What is Ethereum triple halving, and why could it be the main driver behind ETH’s future price growth
Despite the similarity in terms of naming, Ethereum triple halving is nothing like Bitcoin halving, which sees BTC mining rewards cut in half every 210,000 blocks. Instead, Ethereum triple halving is a concept that refers to three key mechanisms that are helping reduce the supply of ETH, and thus drive its value through deflationary pressure.
The three main parts of the Ethereum triple halving are:
- Reduced issuance of new ETH under the Proof-of-Stake consensus algorithm
- The effect of ETH burning, which was first introduced with the EIP-1559 upgrade in August 2021
- The lower amount of ETH in circulation due to the effects of Ethereum staking
All three mechanisms listed above play a role in driving the price growth of Ethereum. Ethereum staking – introduced with the network transition from PoW to PoS last September (an event known as the “The Merge”) – allows investors to deposit lock-in their ETH tokens in order to earn validator opportunities that secure the network in exchange for staking rewards.
The effect of the Ethereum PoS consensus is two-fold. It allows users to stake their ETH in exchange for rewards, which effectively decreases the number of ETH in circulation. Secondly, there is less ETH produced. Under the PoW model, around 13,000 ETH per day were distributed as mining rewards. Meanwhile, under the PoS model, only 1,600 ETH per day is issued to reward stakers – a reduction of more than 87%.
When the reduced issuance of ETH is combined with the effects of Ethereum burning introduced with the EIP-1559, Ethereum turns into a deflationary asset. That’s exactly what we can observe in practice – since the Merge went live on September 15, 2023, the supply of Ethereum decreased by roughly 282,000 ETH. According to simulations run by Ultra Sound Money, the supply of ETH would have increased by 2,938,900 ETH in the same time period if PoW was still in place.
For more information about Ethereum triple halving and how the trio of concepts can act as a long-term price catalyst for ETH, check the video below.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.