Ethereum experienced an over 2% rise in the past 24 hours, reaching $3,865 on June 6. This uptick in the altcoin market mirrors the broader cryptocurrency market’s 1.50% increase during the same period. Key contributors to Ethereum’s surge include the depletion of Ethereum reserves on all crypto exchanges and the influx of institutional investments into Ethereum-focused funds.
What is Driving Ethereum’s Price Up?
A noteworthy trend among Ethereum investors is the increasing withdrawal of Ethereum from exchanges, suggesting growing investor confidence. Data from Glassnode indicates that as of June 5, Ethereum reserves on all exchanges were just over 12.59 million, the lowest since July 2016. Historical data shows a direct correlation between declining exchange reserves and rising Ethereum prices.
This trend implies that investors are holding or staking their assets for prolonged periods, reducing the circulating supply and enhancing price potential. As of June 6, Ethereum’s annual supply growth rate stands at -0.71% since the introduction of the transaction fee burning mechanism in 2021.
How is Ethereum Adoption Growing?
The Ethereum ecosystem has seen nearly ninefold growth in daily active users over the last four years. In the first quarter of 2020, Ethereum, Arbitrum, and Polygon averaged more than 250,000 daily active users, underscoring robust adoption and further bolstering price potential.
Key Observations for Investors
– Ethereum funds observed inflows of $33.5 million in the week ending May 31.
– The SEC’s approval of spot-based Ethereum ETF applications has shifted investor sentiment.
– Pending futures contracts for Ethereum have surged, with open interest rising from $14.68 billion on May 21 to $16.97 billion on June 6.
Ethereum registered inflows for the second consecutive week following the U.S. Securities and Exchange Commission’s (SEC) approval of spot-based Ethereum ETF applications. According to CoinShares’ recent weekly report, these funds attracted $33.5 million in the week ending May 31.
This shift signifies a reversal from a 10-week total outflow of $200 million, raising Ethereum’s bullish expectations ahead of the potential ETF launch. Current price increases for Ethereum coincide with elevated open interest and funding rates.
The SEC’s approval followed a significant rise in the number of pending futures contracts, increasing from $14.68 billion on May 21 to $16.97 billion by June 6. During this period, the peak Ethereum open interest was around $17.09 billion.
