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Ethereum (ETH) appears to be finally waking up from its slumber, rising nearly 37% over the past week following Bitcoin’s (BTC) rally to its all-time high (ATH).
Spot Ethereum ETFs record daily inflows
Ethereum, the second-largest cryptocurrency with a market cap of around $404 billion, is now gaining ground on BTC, with the platform’s ETH token rising more than 35% in the past week.
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While the broader digital asset market is buoyed by Donald Trump’s victory in the 2024 US presidential election, additional factors may also be driving the sector’s recent boom, especially for ETH.
A key data point is the substantial inflow of funds into spot ETH ETFs. On November 11, US-based spot ETH ETFs attracted a record $295 million in daily inflows, the highest amount to date.
By comparison, the previous peak for daily inflows into spot ETH ETFs was $106 million, included on the first day these ETFs were launched in July 2024.
According to data from SoSoValue, the record inflows were led by Fidelity’s FETH ETF, which raised $115.48 million.
BlackRock’s ETHA followed with $101.11 million, Grayscale’s ETH with $63.32 million and Bitwise’s ETHW with $15.57 million.
At the time of writing, the total value of net assets held across various spot ETH ETFs stands at $9.72 billion, representing just over 2.41% of Ethereum’s total market capitalization. Meanwhile, the cumulative net outflows of all spot ETH ETFs amount to $41.30 million.
ETH Price Action and Revival in DeFi
Institutional investors’ renewed interest in Ethereum ETFs, amid record daily inflows, appears to be positively contributing to ETH’s price action.
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For much of 2024, ETH lagged behind major cryptocurrencies like BTC and Solana (SOL) in price performance. However, the fourth quarter of 2024 offers the potential for a dramatic reversal in ETH’s momentum.
Analysis shared by Leon Waidmann, head of research at the Onchain Foundation, indicates that ETH stake levels are at an ATH, while the token’s reserves on crypto exchanges are heading to record lows.
This combination of record-high betting levels and reduced supply on exchanges signals a potential supply contraction, which could trigger a parabolic rally for ETH.
Furthermore, the ETH/BTC ratio appears to be as well recovering after prolonged losses, with the trading pair rising from 0.034 to 0.040 before falling to 0.037 at the time of writing.
The next major resistance for this pair is around 0.040, and a successful break through this level could lead to more gains for ETH versus BTC. At the time of writing, ETH is approximately 32% below its ATH value of $4,878 recorded in November 2021.
Furthermore, Ethereum’s decentralized finance (DeFi) activity appears to be pick steam. Facts from DefiLlama shows that the total value locked (TVL) for Ethereum-based DeFi protocols is currently $62.36 billion, up from approximately $24 billion in November 2023.
More than half of this TVL is tied to the ETH staking platform Lido, which holds nearly $33 billion. Lido is followed by DeFi lending protocol Aave with $15.21 billion and EigenLayer with $14.57 billion.
That said, to assure remain regarding ETH’s “ultrasound money” story due to the token’s high issuance rate. At the time of writing, ETH is trading at $3,291, up 3.1% in the last 24 hours.
Featured image from Unsplash, charts from X.com, DefiLlama.com and TradingView.com
Credit : www.newsbtc.com
