The crypto community was buzzing with excitement yesterday, as Ether, the native asset of the Ethereum Blockchain, crossed the $4,000 mark for the first time this year. ETH rose 6.4% in 24 hours, and currently trades at $4,200. The asset is just $700 away from its all-time high of $4,867 set in November 2021.
But what’s driving the ETH rally, and will the major altcoin reach its all-time high this year? We look at the factors fuelling the rally and what to come next for the second-largest cryptocurrency by market capitalization.
Institutional Demand and ETFs Driving Ethereum Rally
Ether has risen significantly in the last month, jumping a massive 49%. In one week, the asset is up 7.9%, and has gained approximately 90% against Bitcoin since April 21. Other altcoins are performing well too, but it’s obvious that the market is riding on the ETH momentum. The rally is driven by two significant factors – institutional demand and spot Ethereum ETFs.
A growing number of publicly traded companies are aggressively acquiring billions of dollars worth of ETH to build a strategic reserve. The aim? To maintain a robust portfolio and hedge against inflation and fiat depreciation. BitMine, for example, has accumulated over 833,000 ETH worth $3.3 billion. Sports betting company SharpLink follows next with about 522,000 ETH worth $2.1 billion. Recently, GameSquare announced the launch of an Ethereum treasury strategy. Fundamental Global Inc. made a bold move when it filed a $5 billion shelf offering to acquire more Ether. These firms are just getting started, and may soon hold up to 10% of the total ETH supply.
U.S. spot Ethereum ETFs have also seen massive net inflows in recent weeks, even surpassing their Bitcoin ETF counterparts. In one month, ETH ETFS have attracted almost $5 billion. In contrast, spot Bitcoin ETFs are a little above $3 billion. ETH continues to outperform Bitcoin, surprisingly, and it looks like the $4,000 resistance won’t hold up for much longer.
Sentiments Also Driving ETH Price
We can’t overlook some positive news that came in yesterday, which we believe also contributed to ETH’s rally. For instance, United States President Donald Trump signed an executive order to allow cryptocurrency investments to be added to 401(k) retirement accounts, a move that sparked jubilation in the crypto community. This move paves the way for millions of Americans to allocate part of their retirement savings into digital assets, marking a historic shift in the U.S. investment landscape.
Experts believe the news boosted sentiments around cryptocurrencies, reinforcing their legitimacy in mainstream finance. When positive news like this is released, it tends to cause a significant shift in the market. The fundamentals are still a huge force in the crypto space. Ethereum and other coins are riding on the wave currently.
Apart from sentiments, institutional demand is still high. More companies are expected to launch an Ethereum reserve soon. Others like Bit Digital are pivoting from Bitcoin mining to Ethereum accumulation. The momentum is quite high. As our experts previously stated, ETH won’t stay around $4k for long.
What’s Next for Ethereum?
Ethereum bulls held the $3,500 mark as main support before the breakout on Friday. With ETH trading above $4,100, a higher low is established, which sits around $4,000. Price is still consolidating around this mark, and the next trading days will determine if this will be the new support or not.
For now, crypto traders are enjoying the momentum. Those who have held ETH the longest will most likely be celebrating the new milestone. As for surpassing its all-time high, that may likely happen soon. ETH isn’t stopping. Outpacing BTC in gains shows its tremendous momentum.
BTC dominance has slightly declined with the rise of ETH. Its total share has dropped to 59%, signaling a significant shift from the largest cryptocurrency to the second-largest. According to DIQ experts, the rise of ETH suggests the potential for a broader altcoin season. The altcoin season is just warming up.
