Institutional Interest Fuels Ethereum's Price Surge Amid ETF Anticipation
Summary:
Ethereum (ETH) prices have surged, largely driven by the increase in institutional interest. The anticipation of the U.S. Securities and Exchange Commission's (SEC) approval for Ethereum Exchange Traded Fund (ETF) applications alongside the rising capital inflows have contributed to the price hike. Additionally, increased daily fees in Ethereum's DeFi ecosystem and the growth of the Ethereum network have resulted in an increase in network revenue. Despite potential economic factors that might affect Ether's price, the cryptocurrency managed to maintain trades above the important $2,000 level, leading to predictions of further growth.
Ethereum (ETH), the world's second largest cryptocurrency by market capitalization, has experienced a surge in price due to growing institutional attention. This shift in bullish sentiment has caused a 2% lift in Ether's value to a peak of $2,118 during the day. Ethereum's ability to maintain trades above the $2,000 mark is seen as a possible indicator of increasing interest in Ether. This spike in bullish momentum follows last week's remarkable growth that led to a 10.4% rise in ETH's value.
The reason for ETH's surge can be traced back to the soaring interest from institutional investors, ignited by the U.S. Securities and Exchange Commission's (SEC) recognition of Grayscale Investments' application to convert its Ethereum trust into an Exchange Traded Fund (ETF) on November 1. The SEC's action to review crypto ETF requests comes in response to a direct court directive, although a spot crypto ETF has not yet been confirmed. The market, however, is heating up in response to the SEC's impending first-wave ETF approval deadline of November 17.
In an encouraging step for the market, BlackRock, the world's leading asset manager, filed for a spot Ether ETF on November 9. This sent Ether's value past the $2,000 resistance level, leading to a six-month high on the same day. Market observers expect a spot Bitcoin ETF approval to come first, likely in early 2024, followed swiftly by Ether's ETF approval.
As anticipation of approval grows, there has been an increase in institutional capital flows. Bitcoin institutional inflows in 2023 exceeded $1 billion, while options open interest on the Chicago Mercantile Exchange - a tool favored by institutions - surpassed Binance on November 10 for the first time.
The Ethereum decentralized finance (DeFi) ecosystem has seen a 57.6% rise in daily fees on November 13, in line with Ether’s price growth. The surge in Ether fees has led to a 64% increase in Ethereum network revenue over the past week, amassing $6.1 million in just one day on November 12.
Growth in the Ethereum network has led to increased gas fees and a return to a deflationary state. Despite Ethereum network emissions being inflationary over the past 30 days, the recent spike in fees and revenue has caused a 7-day contraction of -0.45% in coin supply growth.
Ether managed to break its crucial $2,000 barrier just as Bitcoin surged past $36,500. Despite some profit-taking, increased trading volumes have helped to maintain these levels. Many analysts predict, given Ether's capability to hold the $2,000 level, that the altcoin could see further growth.
Independent market analyst Michaël van de Poppe suggests that surpassing the $2,150 mark could signify the end of a bear market, drawing a parallel to Bitcoin's $30,000 barrier. Provided it does break this level, a run toward $3,100 - $3,600 is predicted.
However, wider economic factors like additional rate hikes and potential crackdowns on the U.S. industry may slightly dampen Ether's price. Catalysts for price upswing, such as approval for a Bitcoin or Ether ETF, regulatory clearance, and easing of interest rate hikes could impact further growth. Volatility in Ether's price is expected to persist. Do note, this does not constitute investment advice or recommendations. Investing and trading involve risks, and due diligence should be practiced when making financial decisions.
Published At
11/13/2023 7:45:03 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.