Ethereum Price Surge Ahead? Vitalik Buterin’s Scaling Plan Could Burn 713k ETH Annually

Ethereum price is on the rise again and trades around $3,312.8 as of 11 PM on January 24, 2025, but a new proposal from Vitalik Buterin could significantly impact its future trajectory. The co-founder’s recent proposal for accelerating Ethereum’s scalability — targeting 100,000 transactions per second (TPS) — has the ability to potentially reshape ETH’s tokenomics. This vision proposes scaling upgrades and Ethereum’s burn mechanism, which could remove 713,000 ETH annually from circulation, according to Buterin’s estimates. Let’s explore how this could impact Ethereum’s future and short-term impact on the price.

Ethereum Price Today

Ethereum price today trades around $3,312.8 as of 11 PM. From a daily high of $3,430.4 ETH’s value is down -0.71% on October 30. While the short-term performance has been uninspiring, the outlook is likely to change if Vitalik’s suggested plan comes to fruition.

*Ethereum price updated as of 11 PM. 

Vitalik Buterin’s Scaling Proposal & ETH Burn Impact

Vitalik’s recent blog that outlines the “Surge” roadmap aims to scale Ethereum to 100,000 TPS by 2026. This plan aims to achieve its goal via Layer-2 rollups (e.g., Optimism, zkSync) and sharding, which parallelizes transaction processing.

To facilitate these, the blog outlines some key burn mechanisms:

• Ethereum’s EIP-1559, which was introduced in 2021, plays a crucial role in this plan. Buterin notes that scaling would mean higher TPS and, hence, higher fees burned.
• Buterin specifically targets Layer-2 chains to make changes or be left behind.
• As a result, Vitalik projects 713,000 ETH burned annually if adoption aligns with scaling targets.

This would create a deflationary feedback loop of reduced supply and rising demand and would have a bullish impact on the price of ETH, propelling it higher.

Impact on Ethereum Price

As noted above, Vitalik’s plan for Ethereum will create the deflationary feedback loop and could have a profound impact on the price of ETH. If the plan were to be implemented successfully, it could end the token’s lackluster performance witnessed in the past year and potentially kickstart an uptrend. 

In such a case, ETH could revisit $4,000, followed by an attempt to retest the all-time high of $4,877. Analysts predict Ethereum price could hit targets between $6,000 and $10,000.

Market Sentiment and Investor Outlook

Ethereum’s 2024 price performance was uninspiring and has caused investors to be impatient. The recent sale from the Ethereum Foundation pushes traders and critics, leading to a massive community uproar. As a result, Vitalik Buterin has is taking a closer look at the foundation’s structure and is considering alternatives like staking or DeFi services instead of swapping ETH for stablecoins. 

Suffice to say, investors are frustrated and are bearish on the Ethereum price performance. However, this outlook might be changing, a few data points indicate. 

Ethereum ETF Flows

But the outlook could change for long-term and institutional investors as seen in the spot Ethereum ETF flows data provided by SoSo Value. These instruments saw an outflow of $14.93 million on January 23, ending its four-day inflow streak. However, with the approval of a national crypto stockpile, it is likely Ethereum (ETH) will also be included along with Bitcoin (BTC). Hence, ETF flows for the second-largest crypto market capitalization should become positive in the coming days.

With this positive outlook, let’s explore what the ETH’s technical analysis is indicating. 

Ethereum Price Analysis & Forecasts

The daily Ethereum price chart shows a falling wedge formation that forecasts a 17% rally on successful breakout. This technical formation predicts an Ethereum price target of $4,000, which is obtained by adding the height of the wedge to the breakout point of roughly $3,400.

The key support levels include $3,132 and $3,057. A drop into this zone will be a good place to buy the dips.

If ETH breaks the falling wedge’s upper trend line it will face $3,592 resistance level, beyond which it will approach the $4,000 psychological level. If buyers are persistent, Ethereum price will attempt to revisit the ATH at $4,877. But the target that investors are looking for is the $5,000 psychological level. An ambitious target will be the 161.8% Fibonacci extension level of $5,863 or the $6,000 psychological level.

While $6,000 might seem like an exaggerated target, analysts have forecasted ETH could head as high as $10,000 in this cycle.

A breakdown of the $3,000 support floor will invalidate the bullish thesis and potentially trigger a 13% crash to $2,657. In a dire case, Ethereum price could drop as low as $2,341.