Ethereum (ETH) is witnessing a surge in price due to growing institutional interest in the second-largest cryptocurrency by market cap after Bitcoin (BTC). As bullish sentiment grew, the price of Ethereum rose 26.2% in 30 days. The fact that ETH is trading above $2,000 could indicate that more interest is being focused on Ether, and this new bullish momentum has pushed the price of ETH up 69.5% year-to-date.
Let’s review some of the reasons for Ether’s newfound strengths.
As Spot ETH ETF Hype spreads, Institutional Interest Soars.
The institutional investor hype began on November 1, when the U.S. Securities and Exchange Commission (SEC) granted Grayscale Investment’s application to convert its Ethereum trust into an ETF.
The commission’s move is in response to a direct court order ordering it to review Grayscale’s pending ETF application. The spot cryptocurrency ETF has not yet been confirmed.
However, the market sent a more optimistic signal when BlackRock, the world’s largest asset manager, applied for a spot Ether ETF on November 9. This confirmation pushed Ether price above the $2,000 resistance and hit a six-month high on the same day. BlackRock filed Form S-1 with the SEC on November 16.
Many expect the SEC to approve the first spot Bitcoin ETF in early 2024. If that happens, many cryptocurrency analysts will soon see approval for a spot Ether ETF.
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Expectations of approval are increasing institutional capital inflows. Bitcoin institutional inflows surpass $1 billion in 2023.
At the same time, open interest in institutionally preferred CME options surpassed Binance for the first time on November 10.
Ethereum network revenue and fees increase
The Ethereum decentralized finance (DeFi) ecosystem witnessed an increase in daily fees, rising 180% in 30 days on November 20, along with the rise in the price of Ethereum. Due to the Ether fee increase, Ethereum network revenue has increased by 218.6% over the past 30 days, equivalent to $1.94 billion annually.
The growth of the Ethereum network has led to increased gas fees and pushed the network back into a deflationary state. On November 8, Ethereum network emissions experienced inflation, but after fees and revenue increased, Ethereum turned into deflation, with coin supply growth declining -0.31% over 7 days.
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Ethereum price and sentiment rise due to Bitcoin price action
As Bitcoin surpassed $37,000, Ethereum surpassed the $2,000 level. Despite gains in both tokens, increased trading volume helped maintain these levels.
The most significant trades in December and January were a long $40,000 and a long $50,000 call at 1DEC for a $2.8 million premium, offset by a large sell of a $37,000 straddle.⁰
It is also worth noting the December/January diagonal spread of -$37,000/+$39,000 calls.
— GravitySucks (@Gravity5ucks) November 19, 2023
With Ether price showing the ability to sustain $2,000, some analysts believe the altcoin is positioned for further upside amid higher and more positive volatility.
that much $ETH Overwriter bought back over 1 million Vega!
And now there is less chance of overwrite supply putting pressure on the curve. #bigpicture pic.twitter.com/TkZBZPvKOL
— Paradigm (@tradeparadigm) November 20, 2023
While sentiment and volatility for Ether prices are increasing, whales are steadily accumulating more. The whale accumulation occurs two months after whales were net selling Ethereum.
#Ethereum | A subtle yet interesting change is taking place. $ETH It looks like the whales are on a slow accumulation path for the first time in two months! pic.twitter.com/LfvOG0sM3T
— Ali (@ali_charts) November 20, 2023
While the market appears healthy at the moment, macro factors such as further interest rate hikes and a potential U.S. industrial crackdown could weigh a bit on the Ethereum price. Factors such as the approval of a Bitcoin or Ethereum ETF, positive regulatory clarity, or easing interest rate increases could be catalysts for price increases. Ethereum’s price volatility is likely to continue.
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.