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Ethereum (ETH) appears to be finally waking from its slumber, surging nearly 37% in the past week following Bitcoin’s (BTC) all-time-high (ATH) rally.
Spot Ethereum ETFs Record Daily Inflows
Ethereum, the second-largest cryptocurrency with a market cap of approximately $404 billion, is now gaining ground on BTC, with the platform’s ETH token jumping more than 35% over the past week.
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While the broader digital assets market has been buoyed by Donald Trump’s victory in the 2024 US presidential election, additional factors may also be driving the recent industry boom, especially for ETH.
A key data point is the substantial inflow of funds into spot ETH ETFs. On November 11, US-based spot ETH ETFs attracted a record $295 million in daily inflows, the highest amount to date.
In comparison, the previous peak for daily inflows into spot ETH ETFs was $106 million, recorded on the first day these ETFs launched in July 2024.
According to data from SoSoValue, the record inflows were led by Fidelity’s FETH ETF, which drew in $115.48 million.
BlackRock’s ETHA followed with $101.11 million, Grayscale’s ETH with $63.32 million, and Bitwise’s ETHW with $15.57 million.
At the time of writing, the total value of net assets held across various spot ETH ETFs stands at $9.72 billion, representing just over 2.41% of Ethereum’s total market cap. Meanwhile, cumulative net outflows from all spot ETH ETFs amount to $41.30 million.
ETH Price Action And Resurgence In DeFi
Renewed interest from institutional investors in Ethereum ETFs amid record daily inflows appears to be contributing positively to ETH’s price action.
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Throughout much of 2024, ETH lagged in price performance among major cryptocurrencies such as BTC and Solana (SOL). However, Q4 2024 holds potential for a dramatic turnaround in ETH’s momentum.
Analysis shared by Leon Waidmann, Head of Research at Onchain Foundation indicates that ETH staking levels are at an ATH, while the token’s reserves on crypto exchanges is heading toward record lows.
This combination of record-high staking levels and reduced supply on exchanges suggests a potential supply squeeze, which could trigger a parabolic rally for ETH.
Additionally, the ETH/BTC ratio seems to be recovering after prolonged losses, with the trading pair rising from 0.034 to 0.040 before dipping to 0.037 at the time of writing.
The next major resistance for this pair lies around 0.040, and a successful breakout from this level could lead to more gains for ETH over BTC. At press time, ETH sits about 32% below its ATH value of $4,878 recorded in November 2021.
Further, Ethereum’s decentralized finance (DeFi) activity seems to be picking steam. Data from DefiLlama shows that the total value locked (TVL) across Ethereum-based DeFi protocols currently sits at $62.36 billion, up from about $24 billion in November 2023.
Over half of this TVL is tied to the ETH staking platform Lido, which holds close to $33 billion. Lido is followed by the DeFi lending protocol Aave with $15.21 billion and EigenLayer with $14.57 billion.
That said, concerns remain regarding ETH’s “ultrasound money” narrative due to the token’s high issuance rate. At press time, ETH trades at $3,291, up 3.1% in the past 24 hours.
Featured image from Unsplash, Charts from X.com, DefiLlama.com, and TradingView.com
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