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Ethereum (ETH) price crossed the $3,000 mark on February 20, 2024, marking a significant milestone for the cryptocurrency. This achievement comes after a perilous period following its previous peak in April 2022, where it plummeted to $896.11 amidst a bear market. But why is Ethereum rallying now, and what factors are driving its upward momentum? Let’s explore.
To understand Ethereum’s current rally, it’s crucial to examine its price history and market performance. Unlike Bitcoin, whose price surge in 2021 was largely attributed to the IPO of Coinbase, Ethereum’s growth was fueled by technological developments and groundbreaking applications within the Ethereum ecosystem.
In 2021, Ethereum made headlines when a digital art piece sold as the world’s most expensive NFT for over 38,000 ETH, equivalent to $69.3 million. This showcased Ethereum’s versatility beyond being a mere cryptocurrency, highlighting its role in powering decentralized applications and the burgeoning NFT market.
Ethereum’s price also surged with the rollout of the Berlin update in April 2021, which paved the way for the Ethereum Merge in 2022, leading to reduced gas fees and improved scalability. Despite setbacks such as the collapse of FTX in late 2022, Ethereum has shown resilience and continued to evolve.
As of February 28, 2024, the Ethereum price is at $3,340.08, accompanied by a substantial 24-hour trading volume of $19.06 billion, a decrease of 12.58% . Over the past day, Ethereum has experienced a surge of 2.81% in its price. Maintaining its position as the second-largest cryptocurrency on CoinMarketCap, Ethereum boasts a live market capitalization of $402.1 billion. With a circulating supply of 120 million ETH coins, Ethereum continues to demonstrate its prominence in the digital asset landscape.
Despite reaching its all-time high of $4,891.70 on November 16, 2021, Ethereum has experienced a decline of 31..3% compared to its current price. However, recent trends indicate promising growth, with Ethereum witnessing an increase of 14.83% over the last 7 days and a surge of 106% over the past year.
Several factors have fueled Ethereum’s recent surge, with market dynamics and technological advancements playing crucial roles. Here are some of the top reasons driving ETH upward momentum:
Market optimism has surged recently, largely fueled by the possibility of the United States Securities and Exchange Commission (SEC) approving a spot Ether exchange-traded fund (ETF). According to current odds from Polymarket, there’s a 45% likelihood of approval by May 31.
Additionally, Bloomberg’s ETF analyst Eric Balchunas has forecasted a 70% chance of approval for Ether ETFs. This optimistic outlook from Balchunas suggests positive prospects for Ether ETFs amidst ongoing regulatory deliberations. As the market eagerly anticipates the potential approval of a spot Ether ETF by the SEC, Ethereum’s price performance reflects this anticipation and optimism.
The recent surge in Ethereum’s performance may also be attributed to the forthcoming implementation of Ethereum Improvement Proposal (EIP) 4844 through the Dencun upgrade. Scheduled for March 13, the Ethereum network’s highly anticipated Dencun upgrade is poised to introduce several EIPs, with EIP-4844 taking the spotlight. This proposal introduces proto-danksharding, a mechanism aimed at simplifying the transaction process by storing certain data off the blockchain. This innovation is expected to accelerate transactions and reduce costs, further enhancing Ethereum’s efficiency and scalability.
Open Interest (OI) in Ethereum (ETH) has surpassed $11.32 billion, according to Coinglass. Data from CoinGlass indicates a significant uptick in open interest (OI) within the Ether futures market, reaching a record-breaking $11.32 billion. This surge in OI validates the existing volatility in ETH’s price, reflecting heightened market activity and investor interest.
Many market participants anticipate continued bullish price action, particularly in light of any news related to the potential approval of a spot Ether ETF and broader movements in the crypto market. This confidence in Ethereum’s price is evident, with increased demand for leverage contributing to the rise in open interest. Overall, the market sentiment surrounding Ethereum remains positive, with OI serving as a key indicator of investor confidence and market dynamics.
Speculation has arisen following a series of substantial Ethereum (ETH) purchases, attributed to a wallet potentially linked to Justin Sun, the founder of the TRON blockchain and CEO of BitTorrent. According to data from blockchain analytics firm Lookonchain, the suspected wallet recently acquired an additional 13,780 ETH, valued at approximately $41.24 million. This latest acquisition adds to a total of 168,369 ETH, worth roughly $487 million, amassed in just a span of two weeks from both centralized exchanges like Binance and decentralized exchanges (DEXs).
The week saw an increase in buying activity, with noticeable purchases happening nearly every day. The largest single transaction, recorded on February 19th, witnessed the suspected Sun wallet obtaining 54,721 ETH, totaling $154.4 million. Some analysts assert that these whale activity could serve as a bullish signal for Ethereum, indicative of a strong belief in the platform’s long-term potential. This interpretation aligns with Ethereum’s recent price surge, reaching a high of $3,000.
The suspected #JustinSun wallet bought 18,616 $ETH($54.57M) from #Binance again 10 mins ago.
He bought 151,196 $ETH($435.3M) at $2,879 from #Binance and #DEX in less than 12 days!😱https://t.co/pq40KOW7Fi pic.twitter.com/1aZjvWCnvB
— Lookonchain (@lookonchain) February 23, 2024
In recent weeks, Ethereum restaking protocols have experienced a notable surge in activity, particularly on layer-2 blockchains. This surge signifies a growing trend in the cryptocurrency market, with investors increasingly turning to restaking as a means to enhance their returns and participate in network governance.
As part of this trend, liquid-staking derivative applications like EigenLayer have garnered significant attention. EigenLayer recently made headlines by securing a $100 million in funding from venture capital firm Andreessen Horowitz. This influx of capital underscores the rising interest in Ethereum’s ecosystem and the potential for innovative applications to thrive.
The impact of this investment is evident in EigenLayer’s total value locked (TVL), which witnessed an impressive jump from $1.8 billion to $8.78 billion within just 30 days leading up to February 26. This surge catapulted EigenLayer to the forefront of the Ethereum ecosystem, surpassing established protocols like WBTC and MakerDao to claim the coveted second position, according to data from DefiLlama.
Restaking, a fundamental aspect of these protocols, involves the reuse of staked or locked-up Ether to boost Ethereum staking yield and earn protocol rewards and airdrops. This process not only enhances the efficiency and security of the network but also reduces the token supply available for trading on exchanges. As a result, the reduced supply can potentially drive up demand, presenting a bullish signal for Ethereum’s future prospects.
Additionally, optimism toward Ethereum’s price has been fueled by successful airdrops. Starknet (STRK), a layer-2 solution token, launched on February 20, initially gathering $160 million in TVL. Despite this modest start, STRK’s market capitalization has surged to $1.4 billion, indicating strong market confidence.
Similarly, the upcoming token launch from layer-2 solution Blast has attracted over $2 billion in deposits, and reaching $2.133 billion in total value locked (TVL) despite facing controversy during its initial release in November 2023. These successful airdrops highlight growing investor interest in Ethereum’s ecosystem, contributing to positive sentiment and potential price increases.
As Ethereum continues to innovate and expand its utility beyond traditional cryptocurrency, investors and enthusiasts alike remain optimistic about its future prospects. While volatility and regulatory uncertainties persist, Ethereum’s resilience and adaptability position it as a leading player in the ever-evolving digital landscape.
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