Ethereum’s daily net inflow to exchanges reached 62,000, a peak not seen since early March, as investor interest surged amidst growing anticipation of spot exchange-traded fund (ETF) approvals. This heightened demand for Ethereum came as the market eagerly awaited the US Securities and Exchange Commission’s (SEC) decision on these funds. CryptoQuant analysts have noted on-chain dynamics that could potentially lead to significant market volatility.
Why is Ethereum Rising?
Earlier in the week, Ethereum experienced a remarkable 25% increase in just two days, pushing its value above $3,900, the highest level since mid-March. This spike was influenced by Bloomberg ETF analysts who raised the likelihood of SEC approval from 25% to 75%. The price surge was largely driven by investors in the perpetual futures market and long-term holders of the cryptocurrency.
Perpetual futures market investors aggressively took long positions in Ethereum, anticipating price rises due to the ETF approval rumors. This caused the total open positions in the futures market to jump from 2.8 million to 3.2 million Ethereum within hours, marking the highest level since January 2023.
Notable Details
The Ethereum-Bitcoin Open Interest ratio also climbed from 0.54 to 0.67, showing that investors preferred Ethereum over Bitcoin. This indicated that Ethereum’s total open position ratio was 67% of Bitcoin’s, suggesting a market confidence tilt towards Ethereum.
Additionally, long-term holders accumulated 100,000 Ethereum within 24 hours, the highest daily level since September 2023. The staked amount of Ethereum also saw recovery, rising from 32.4 million to 32.5 million on May 20, underscoring growing investor confidence.
Key Insights for Investors
Here are essential takeaways for investors based on the current Ethereum market dynamics:
- The rising Ethereum-Bitcoin Open Interest ratio suggests a market preference for Ethereum over Bitcoin.
- A significant accumulation by permanent holders is a strong indicator of long-term confidence in Ethereum.
- The sharp increase in daily net inflow to exchanges may foreshadow heightened price volatility.
In summary, investor optimism surrounding potential ETF approvals has significantly bolstered Ethereum’s market activity. The cryptocurrency’s robust recovery and increased net inflow to exchanges highlight the market’s positive sentiment and anticipation of future gains. Investors should remain vigilant, as historical patterns suggest that such inflows often precede notable price movements.