The cryptocurrency community is all abuzz! Naturally, everyone wants to know whether or not Ethereum (ETH) is going to fly all the way up to that lofty price target of $10,000. Several factors are fueling this optimism, including the potential approval of Ethereum-based Exchange Traded Funds (ETFs) with staking capabilities and Ethereum's deflationary mechanisms. As with any investment, it’s important to look at the potential upsides and the built-in risks that come along with them. LeeChiaJian to discuss 10,000 usd ethereum price prediction. Most importantly, he’ll dig into the ways a potential ETF approval and Ethereum’s deflationary mechanics might blow this optimistic forecast up.

The ETF Approval Catalyst

The imminent approval of Ethereum ETFs is a complete game-changer though, one that would likely send the price of Ethereum soaring. Eric Jackson, founder of EMJ Capital, believes that Ethereum could reach $10,000 during the current bull cycle, partly driven by this ETF approval. Much of this optimism is due to a few major factors that ETFs have to offer.

Increased Adoption and Investment

Ethereum-based ETFs offer a fresh new dynamic for investors. Now, everyone who wants to invest in Ethereum can do so easily without the hassle of traditional crypto exchanges. ETFs are a structured, regulated, and more familiar investment vehicle. This has the potential to draw in a second wave of investors, particularly those who like to use their traditional brokerage accounts, IRAs, or 401Ks. This increased accessibility will allow for millions of new retail users to enter the market, creating a huge surge in demand for Ethereum and driving its price higher.

Commodity Classification and Market Share

The SEC's approval of spot Ether funds suggests that the regulatory body views Ethereum more as a commodity than a security. This new classification is a huge victory for Ethereum, as it gives Ethereum more legitimacy, and importantly, less regulatory uncertainty. Additionally, the initial ETF industry first movers are in a position to acquire an outsized advantage. By establishing themselves early, they can capture a larger market share and attract more assets under management, further benefiting Ethereum's price.

Ethereum's Deflationary Mechanics

Beyond the ETF hype, Ethereum’s unique deflationary mechanisms likely contribute the most to its potential price appreciation. These powerful mechanisms are fueled by EIP-1559 and the transition to Proof-of-Stake (PoS). They’re intended to reduce the total supply of Ethereum, making it scarcer and potentially more valuable.

EIP-1559 and the Burning Mechanism

Ethereum Improvement Proposal 1559 (EIP-1559) created an automated burning mechanism that destroys a portion of transaction fees. This means that with every transaction on the Ethereum network, a small amount of ETH is permanently removed from circulation. This burning mechanism removes downward pressure on ETH price, combats inflation and makes ETH increasingly scarce in the long run.

Proof-of-Stake and Reduced Issuance

The switch of Ethereum from Proof-of-Work (PoW) to PoS only increased and accelerated these deflationary characteristics. With PoS, the network now burns as much or even more ETH every day, slashing ETH issuance in half or more. This change reduced the daily ETH issuance by more than half. On busy days on the network, ETH burned can be more than ETH issued, leading to deflation.

Deflationary Trends and "Ultrasound Money"

As a result of these mechanisms, Ethereum's inflation rate has, at times, been lower than Bitcoin's, leading to the concept of "ultrasound money." This last term helps to call attention to the fact that Ethereum may end up being a more scarce and desirable asset than gold. Ethereum’s inflation rate is highly dynamic and directly responsive to the level of activity on the Ethereum network. Since after the Dencun upgrade in September 2024, it passed that threshold. Now with Ethereum’s max annual inflation rate permanently capped under 0.5%, hyperinflation is impossible.

Bullish Indicators and Market Sentiment

There are a few other indicators that Ethereum has a particularly bullish trajectory ahead. These are things like record-high futures open interest, increasing demand from corporate treasuries, increased staking activity and increasing on-chain activity.

Record Futures Open Interest and Corporate Demand

Ethereum’s futures open interest has exploded well beyond its all-time extreme, a sign that investors have developed an insatiable appetite for the asset. This kind of activity usually means a lot of investors are speculating on the short-term price appreciation of Ethereum. Beyond those bullish sentiments, corporate treasuries have been buying Ethereum hand over fist, buying up nearly 2% of all ETH in the last 30 days alone. Increased Demand from Institutional Investors This is another positive aspect of the institutional investor bullish case for ETH.

Increased Staking and On-Chain Activity

Staking deposits have reached new all time monthly records. This further indicates that a growing percentage of ETH holders are staking their tokens to participate in the network’s proof-of-stake consensus mechanism. This removes Ethereum from circulation and decreases the supply available on exchanges, which can increase the price. Further, on-chain activity has been increasing, as evidenced by transaction fees recently more than doubling over several weeks. This increased and sustained activity is contributing to much higher ETH burn rates, steadily reducing overall supply.

The Bearish Perspective: Risks and Challenges

Ethereum’s price is extremely volatile and a bear market can erase half your investment.

Price Volatility and Market Downturns

Ethereum’s current price, like every other crypto asset, has been extremely volatile, with massive rises followed by a quick react downwards. Ethereum’s price is most significantly affected by market downturns. As we have seen in the last two recessions, its value often falls below recession-deepening levels during these downturns. Ethereum’s long-term potential may be brighter than ever, but investors will have to brace themselves for the inevitable price fluctuations and market corrections ahead.

Regulatory Uncertainty and Lack of Protection

The crypto market, after all, is still nascent. It lacks many of the regulations and investor protections that you’d find in traditional financial markets. This is a huge burden to place on any investor, as it essentially removes all recourse from them should they lose money through fraud, theft, or other unexpected occurrences. Alternatives to bitcoin, or altcoins, are notorious for their volatility. Many of them lose a substantial percentage of their value within a few months, and that could immediately impact Ethereum’s price as it tends to follow the general altcoin market very well.

Risk of Complete Crash

In other words, Ethereum has a much lower chance of going to zero than the small cap altcoins. Investors should still recognize that a crash isn’t just possible, it’s likely. Various factors, such as regulatory crackdowns, security breaches, or a loss of confidence in the technology, could trigger a significant price decline. This emphasizes the need for investors to assess their risk appetite and build a diversified portfolio to minimize the risk of losses.

Conclusion: A Balanced Perspective

Here are the main reasons behind the possibility for Ethereum price to reach $10,000. Central to this optimism is the potential approval of Ethereum ETFs, and Ethereum’s deflationary mechanisms. With this ETF approval, Bitcoin has the opportunity to welcome an entirely new investor class. At the same time, through the burning mechanism and the transition to PoS, Ethereum’s overall supply will be decreased, making it scarcer and in turn more valuable.

Nevertheless, it’s important to take into account that the cryptocurrency market is extremely volatile and involves high risks. Prospective investors will want to weigh these potential upsides with the potential downsides before making any investment decisions. Though the outlook is encouraging, it is critical to enter into this market with a level head and knowledgeable frame of mind. As KnowingCoin.com always says, "No fluff, no FOMO—just the tools to own your chain and conquer the game."