Rising expectations for the approval of Ethereum spot ETFs in the United States have caused the price of Ethereum (ETH) to surge more than 26% over the past two days to trade at high levels not seen since the March 15.
Since hitting $3,800, ETH price has pulled back slightly, but the potential for immediate Ethereum ETF approval along with fundamental factors and on-chain metrics suggest that the upside potential of the altcoin remains intact.
Rising Open Interest Supports Ethereum’s Rise
One of the factors supporting Ether’s bullish trend is the increase in open long positions of ETH in the futures market. Data from on-chain market intelligence firm CryptoQuant shows that total open interest for Ethereum in the derivatives market increased from 2.8 million to 3.2 million ETH in a matter of hours on May 20 after the emergence of rumors that the United States Securities and Exchange Commission (SEC) was American – Enable approval for instant ETFs. This is the highest open interest since January 2023.
CryptoQuant analysts noted that
“Traders in the perpetual futures market have aggressively opened long positions in Ethereum, anticipating a price rise following rumors that a US Ethereum ETF could be approved in May.”
In US dollar terms, ETH open interest has now reached an all-time high of $14.68 billion. The increase in open interest simply indicates that the underlying trend is strong and that investor confidence in Ethereum can be sustained.
Traders now prefer Ether to Bitcoin
The potential approval of an Ethereum spot ETF this week has sparked discussion among analysts about the potential implications for Ethereum’s price.
According to CryptoQuant analysts, there are now more orders to buy ETH on the perpetual futures market than other order types. The chart below shows that the buy/call ratio is greater than one, indicating that buy orders in the perpetual futures market are now greater than sell orders.
“This puts upward pressure on prices.”
Additional data from CryptoQuant also revealed that traders now prefer greater exposure to Ethereum over Bitcoin. This is illustrated by the open interest ratio for Ethereum and Bitcoin (purple line in the chart below), which increased from 0.54 to 0.67 on May 20. This means that Ethereum’s total open interest is 67% of Bitcoin’s total open interest.
“A higher ratio indicates that traders prefer to have greater exposure to ETH than to Bitcoin on margin, and vice versa.”
Similarly, TradingView data reveals that the ETH/BTC trading pair rose from a low of $0.04572 on May 20, increasing 19.6% to a two-month high of $0.06471 on May 21st. This indicates a strengthening in the price of Ethereum against BTC.
The strength of the ETH/BTC uptrend is reinforced by the RSI position at 68, indicating that Ethereum’s uptrend is intact.
about: Is the Ethereum ETF confirmed? The VanEck Spot Ether ETF is listed on the DTCC
Demand for ETH is increasing
Data from CryptoQuant reveals that growing demand for ETH appears to be gaining momentum again amid increased purchases from permanent holders following rumors of ETF approval. The chart below shows the increase in ETH purchases by permanent holders on May 20, based on expectations of immediate approval of the ETF.
CryptoQuant defines perpetual holders as “addresses that collect ETH and never sell it.”
“This type of owner purchased over 100,000 ETH, the highest daily level since September 2023.”
Popular analyst Ali Martinez made similar observations, sharing the following chart from Santiment showing the growing accumulation of ETH whales on May 20.
Market intelligence firm Santiment noted that while public sentiment towards Bitcoin and Solana remains bearish, hype around Ethereum has reached its highest level since September 2023.
“#Ethereum experiences the most #bullish crowd sentiment since September, SEC likely to approve first #ETFs, and ETH to USD prices rise.”
According to data from Alternative.me, the fear and greed index for cryptocurrencies reached the “Extreme Greed” zone at 76, compared to “Greed” at 64 last week. This means that retail investors are increasingly positive about cryptocurrencies, and if the SEC approves instant money transfers for Ethereum this month, the price of Ethereum is expected to continue its upward trend. the rise.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.
