Why Ethereum (ETH) Price Surge Beyond $3,800 is Imminent

Recently, Ethereum (ETH) witnessed a price surge, attributed by growing anticipation of spot Ethereum ETFs getting approval in the United States. This positive sentiment caused ETH’s price to surge more than 25% in only two days, reaching levels not seen since mid-March. Although there was a momentary decline to about $3,800, various key indicators suggest that this slowdown is only temporary and Ethereum, is expected to continue its upward trend.

Current Market Performance of ETH Price

Ethereum price is currently trading at $3,788.21, having experienced a minor increase of 1.01%. ETH has also shown a bullish trend in mid and long-term with a rise in value by 25.91% and 19.21%, over the past week and month respectively. Year-to-date, the coin has seen an increase of 103.93%. Despite this robust performance, ETH value is still 22.54% below its all-time high of $4,891.70, which was achieved on November 16, 2021.

Although it has a market capitalization of $455.08 billion, making it the second-largest cryptocurrency by market cap, ETH witnessed a decrease of 28.37% in its 24-hour trading volume to reach $24.06 billion.

Key Factors Supporting Ethereum Price Uptrend

Here’s why Ethereum’s bullish momentum is likely to continue.

1. Rising Open Interest  of ETH Price Signals Confidence

One of the most compelling indicators of Ethereum’s potential for future price growth is the rising open interest in ETH futures. CryptoQuant reported that within a few hours on May 20, the open interest for ETH increased from 2.8 million to 3.2 million. This increase happened at the same time that there were speculations about the SEC possibly giving the green light to Ethereum ETFs.

The record high of $14.68 billion in open interest in U.S. dollar value shows investors’ strong belief in Ethereum’s future. A high level of open interest usually indicates a strong trend and increasing investor confidence. Traders in the perpetual futures market are showing a strong sentiment by aggressively initiating long positions.

2. Growing Demand Among Permanent Holders

Another critical factor supporting Ethereum’s bullish outlook is the increased accumulation by Permanent Holders. These are addresses that consistently buy and hold ETH without selling. On May 20, amid ETF approval rumors, Permanent Holders purchased over 100,000 ETH—the highest daily level since September 2023, according to CryptoQuant.

This behavior signifies long-term confidence in Ethereum’s value, further buoyed by positive market sentiment. Popular analysts and market intelligence firms like Santiment have observed a heightened bullish sentiment towards Ethereum, with accumulation by ETH whales reaching significant levels.

3. Increasing Preference for ETH Over BTC

The potential approval of a spot Ethereum ETF has not just sparked enthusiasm but also shifted investor interest towards ETH. CryptoQuant data indicates a taker-buy ratio above one, showing more buy orders than sell orders in perpetual futures. The rise in prices is also backed by the Ethereum-Bitcoin Open Interest ratio, which rose from 0.54 to 0.67, showing a preference for Ethereum over Bitcoin among traders.

Moreover, there was a significant surge in the ETH/BTC trading pair, climbing 18.8 from $0.04572 to 0.05430724, indicating an increase in Ethereum’s value relative to Bitcoin.

Conclusion

The combination of rising open interest, a shift in trader favor towards Ethereum, and increasing demand from long-term holders provides a solid base for ETH price ongoing bullish momentum. While Ethereum’s price is currently steady at $3,800, crucial indicators suggest that this situation is probably only temporary. The SEC potentially approving spot Ethereum ETFs could act as a major trigger, pushing ETH prices up and solidifying its upward trend. The market is eagerly awaiting this development, signaling Ethereum is poised for another advancement.

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