Ethereum price is up today as excitement over a potential spot ETH ETF and the price holding above the key $2,000 level motivates traders.
Ethereum (ETH) is witnessing a price breakout on the back of increasing institutional interest in the second-largest cryptocurrency behind Bitcoin (BTC) by market cap. The increased bullish sentiment pushed Ether price up by 26.2% in 30-days. The fact that ETH trades above $2,000 could indicate that greater attention is shifting toward Ether and this renewed bullish momentum has sent ETH price to gain 69.5% year-to-date.
Let’s review a few of the reasons for Ether’s newfound strength.
Institutional interest soars as the spot ETH ETF hype spreads
The institutional investor hype began on Nov. 1 when the U.S. Securities and Exchange Commission (SEC) acknowledged Grayscale Investment’s application to convert its Ethereum trust into an ETF.
The commission’s move responds to a direct court order that mandates it to review Grayscale’s pending ETF applications. So far, it has not confirmed a spot crypto ETF.
However, the market flashed more bullish signals when BlackRock, the world’s largest asset manager, filed for a spot Ether ETF on Nov. 9. The confirmation sent Ether price over the $2,000 resistance, earning a 6-month high on the same date. BlackRock filed the S-1 form with the SEC on Nov. 16.
Many anticipate that the SEC will first approve a spot Bitcoin ETF in early 2024. Once that happens, many crypto analysts see a spot Ether ETF approval shortly after.
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The anticipation of approval is leading to increased institutional capital inflows. Bitcoin institutional inflows have topped $1 billion in 2023.
At the same time, CME options open interest, a favorite of institutions, topped Binance for the first time on Nov. 10.
Ethereum network revenue and fees increase
The Ethereum decentralized finance (DeFi) ecosystem witnessed a boost in daily fees, growing 180% in 30-days on Nov. 20, in tandem with Ether’s price growth. With the increase in Ether fees, the Ethereum network revenue is up 218.6% in the past 30-days, which equates to $1.94 billion annualized.
The Ethereum network’s growth has increased gas fees and turned the network deflationary again. On Nov. 8, Ethereum network emissions had been inflationary, but after the increase in fees and revenue, Ether turned deflationary with its coin supply growth contracting by -0.31% in a 7-day period.
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Bitcoin price action lifts Ethereum price and sentiment
Ether broke the key $2,000 level right as Bitcoin barrelled above $37,000. Despite profit taking from both tokens, the increase in trading volume has helped maintain these levels.
The most significant trades, with buy of $40k and $50k calls on December and January, offset by the massive sale of $37k straddle on 1DEC for a premium of $2.8M received.⁰
— GravitySucks (@Gravity5ucks) November 19, 2023
It's also worth noting the diagonal spread on December/January, -$37k/+$39k call.
2/ pic.twitter.com/40xBkBVufw
With Ether price demonstrating an ability to maintain $2,000, some analysts believe the altcoin is positioned for further upside amid higher and positive volatility.
The $ETH overwriter has bought back over 1 Million Vega!
— Paradigm (@tradeparadigm) November 20, 2023
And now there is less likely overwritter supply weighing on the curve. #TheBigPicture pic.twitter.com/TkZBZPvKOL
While sentiment and volatility are increasing for Ether price, whales are steadily accumulating more. The whale accumulation happens after 2-months of net whale selling Ether.
#Ethereum | There's a subtle yet intriguing shift happening – $ETH whales seem to be on a slow accumulation path for the first time in two months! pic.twitter.com/LfvOG0sM3T
— Ali (@ali_charts) November 20, 2023
While the current market looks healthy, macro factors like further rate hikes and potential U.S. industry crackdown may weigh on Ether’s price slightly. Factors such as a Bitcoin or Ether ETF approval, positive regulatory clarity and an easing of interest rate hikes may prove to be catalysts for price growth. Ether’s price volatility is likely to continue.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
