What is the reason behind the current increase in the price of Ether (ETH)?
The surge in Ethereum's price today can be attributed to traders' enthusiasm fueled by the prospect of a spot ETH ETF and the currency maintaining its position above the critical $2,000 level.
Ether (ETH) is experiencing a price breakout driven by growing institutional interest in the second-largest cryptocurrency by market capitalization. The heightened bullish sentiment has led to a 2% increase in Ether's price, reaching an intraday high of $2,118. The fact that ETH is trading above the $2,000 mark suggests an increasing focus on Ether. This renewed bullish momentum follows a noteworthy performance last week, with ETH gaining 10.4%.
Ether price. Source: TradingView
Several factors contribute to Ether's recent strength:
1. Soaring Institutional Interest:
The institutional excitement began on November 1 when the U.S. Securities and Exchange Commission (SEC) acknowledged Grayscale Investment's application to convert its Ethereum trust into an exchange-traded fund (ETF). Despite the SEC not confirming a spot crypto ETF, the market gained momentum, anticipating potential approvals by the SEC before the November 17 deadline. BlackRock, the world's largest asset manager, filing for a spot Ether ETF on November 9, further boosted market confidence.
2. Ethereum Network Growth:
The Ethereum decentralized finance (DeFi) ecosystem experienced an increase in daily fees, growing 57.6% in seven days by November 13, aligning with Ether's price growth. This surge in fees contributed to a 64% increase in Ethereum network revenue over the past seven days, reaching $6.1 million on November 12. The growth in gas fees has turned the Ethereum network deflationary, with Ether's coin supply contracting by -0.45% in seven days.
Ethereum network fees and revenue. Source: TokenTerminal
3. Bitcoin Price Action Impact:
Ether surpassed the key $2,000 level as Bitcoin surged above $36,500. Although both coins saw profit-taking, increased trading volume helped sustain these levels. The ability of Ether to maintain the $2,000 threshold suggests potential upside, with analysts indicating that breaking above $2,150 could mark the end of a bear market for Ether.
While the current market appears healthy, macroeconomic factors like additional interest rate hikes and potential regulatory actions in the U.S. industry could exert slight pressure on Ether's price. On the positive side, catalysts such as the approval of a Bitcoin or Ether ETF, regulatory clarity, and a slowdown in interest rate hikes may contribute to further price growth. Given the ongoing volatility, Ether's price is likely to remain dynamic.