The price of Ether (ETH) has surged more than 26% over the past two days, trading at highs not seen since March 15, as expectations rise that a spot Ethereum ETF will be approved in the United States.
Since reaching $3,800, ETH price has declined slightly, but spot Ethereum ETF approval prospects, fundamentals, and on-chain indicators suggest that the altcoin upward trend remains intact.
Ethereum’s upward trend is supported by increased open interest
One factor supporting Ether’s upward trend is the increasing long positions of ETH in the futures market. According to data from on-chain market intelligence firm CryptoQuant, Ethereum’s total public interest in derivatives markets rose to 2.8 million ETH in a matter of hours on May 20 after rumors emerged that the U.S. Securities and Exchange Commission (SEC) was creating a U.S. increased to 3.2 million ETH. – Enable spot Ethereum ETF approval. This is the highest open interest since January 2023.
CryptoQuant analysts noted:
“Traders in the perpetual futures market have aggressively opened long Ethereum positions in hopes of higher prices following rumors that a U.S. spot Ethereum ETF could be approved in May.”
In US dollar terms, ETH open interest has now risen to an all-time high of $14.68 billion. High open interest simply indicates that the underlying trend is strong and investor confidence in Ethereum may continue.
Traders now prefer Ether over Bitcoin.
The possible approval of a spot Ethereum ETF this week has sparked discussion among analysts about the impact it could have on the price of Ethereum.
According to CryptoQuant analysts, there are currently more orders to buy ETH in the perpetual futures market compared to other types of orders. The chart below shows that the taker-buy ratio is above 1. This indicates that the buy order in the perpetual futures market is currently larger than the sell order.
“This adds to upward pressure on prices.”
Additional data from CryptoQuant shows that traders now prefer greater exposure to Ethereum compared to Bitcoin. This is represented by the Ethereum-Bitcoin open interest ratio (purple line in the chart below), which surged from 0.54 to 0.67 on May 20th. This means that Ether’s total open interest is 67% of Bitcoin’s.
“The higher the ratio, the more traders will prefer to have more exposure to ETH than Bitcoin on margin and vice versa.”
Similarly, data from TradingView shows that the ETH/BTC trading pair rose 19.6% from a low of $0.04572 on May 20 to reach a two-month high of $0.06471 on May 21. This suggests that the price of Ethereum has strengthened compared to BTC.
The strength of the ETH/BTC uptrend is reinforced by the relative strength index of 68, which indicates that Ethereum’s uptrend remains intact.
Related: Has the Ethereum ETF been confirmed? VanEck Spot Ether ETF Listed on DTCC
ETH demand increases
According to CryptoQuant data, growing demand for ETH appears to have regained traction, with purchases by perpetual holders increasing following rumors of ETF approval. The chart below shows the increase in ETH purchases by perpetual holders on May 20th, based on spot ETF acceptance expectations.
CryptoQuant defines a perpetual holder as “an address that accumulates ETH and never sells it.”
“These types of holders purchased 100,000+ ETH, the highest daily level since September 2023.”
Popular analyst Ali Martinez made a similar observation on May 20th when he shared the following chart from Santiment that shows increased accumulation by ETH whales.
Market intelligence firm Santiment noted that while crowd sentiment toward Bitcoin and Solana remains bearish, the hype surrounding Ethereum has reached its highest level since September 2023.
“#Ethereum is seeing the most bullish crowd sentiment since September due to the #SEC likely approving the first #ETF and $ETH’s price surge.”
According to data from Alternative.me, the Crypto Fear Greed Index rose from 64 last week to 76, which is in ‘extreme greed’ territory. This means that retail investors are becoming increasingly positive about cryptocurrencies, and the price of ETH is expected to continue its upward trend once the SEC approves spot Ethereum EFTs this month.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.