- Ethereum is seeing significant capital inflows as the ETH/BTC ratio rises by 15%.
- ETH open interest and futures premiums indicate high bullish sentiment among traders.
- If Ethereum confirms a surge above the resistance of the key uptrend line, a rally to $4,522 is possible.
Ethereum (ETH) rose 9% on Wednesday due to increased capital inflows into the ETH ETF and a significant rise in open interest and futures premiums. If this bullish momentum continues, ETH could overcome the yearly high resistance at $4,093 and rise to $4,522.
Ethereum Witnesses High Bullish Sentiment Amid Massive ETH/BTC Migration
The Ethereum ETF recorded net inflows of $40.6 million on Tuesday, marking the third consecutive day of positive flows into the product, according to data from Coinglass. This comes amid a wave of net outflows for Bitcoin ETFs.
Unlike before when the BTC ETF outflow dragged ETH down, the ETH ETF is starting to go its own way.
A potential reason for the positive flow could be investors switching from Bitcoin to ETH in anticipation of altcoin season.
Altcoin season is a phase in the cryptocurrency market cycle where investors take profits after benefiting from the Bitcoin bull market and shift their investments to altcoins with Ethereum as a viable alternative.
Most investors are calling it alternative season, as Ethereum has outperformed Bitcoin over the past few weeks. Since hitting a low of $0.3204 on November 21st, the ETH/BTC ratio, which measures the performance of ETH relative to BTC, has surged more than 15%.
ETH/BTC daily chart
The rise in ETH is accompanied by strong bullish sentiment across the derivatives market.
ETH open interest (OI) reached an all-time high of 6.55 million ETH, worth $23.34 billion, on Wednesday and has continued to increase over the past two weeks, according to data from Coinglass.
Open interest is the total number of outstanding contracts in the derivatives market. OI increasing with price indicates bullish pressure is increasing.
ETH open interest | coin glass
Additionally, the three-month premium (difference between futures price and spot price) for ETH across crypto exchanges Binance, OKX, and Deribit has soared to 16%, according to Velo data.
Ethereum Price Prediction: ETH could surge above the uptrend line resistance and complete the rally to $4,522
Ethereum is up 9% after sustaining $58.26 million in liquidations in the past 24 hours, according to data from Coinglass. The long and short positions liquidated were $28.52 million and $29.75 million, respectively.
The top altcoin has soared above the key level of $3,400, testing the resistance of the uptrend line extending from November 12th.
ETH/USDT daily chart
If ETH maintains its bullish momentum and overcomes the resistance at this trend line, it could rise above the year-to-date high of $4,093 and reach $4,522. This move completes the inverted head-and-shoulders rally that ETH has been hinting at for the past two weeks.
The Relative Strength Index (RSI) is trending up and testing the overbought regional line, indicating increasing bullish momentum.
If the daily candlestick closes below the $2,817 level, the bullish theory will be invalidated and ETH will look for support near $2,300.
Frequently asked questions about Ethereum
Ethereum is a decentralized open-source blockchain with smart contract capabilities. Its native currency, Ether (ETH), is the second largest cryptocurrency by market capitalization and number one among altcoins. The Ethereum network is tailored for building cryptographic solutions such as decentralized finance (DeFi), GameFi, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs).
Ethereum is a public decentralized blockchain technology that allows developers to build and deploy functional applications without the need for a central authority. To facilitate this, the network leverages the Solidity programming language and the Ethereum virtual machine, allowing developers to create and launch applications with smart contract functionality.
A smart contract is a publicly verifiable piece of code that automates an agreement between two or more parties. Essentially, these codes self-execute the coded actions if a given condition is met.
Staking is the process of earning revenue from idle crypto assets by locking them in a cryptographic protocol for a specified period of time as a means of contributing to security. Ethereum transitioned from Proof of Work (PoW) to Proof of Stake (PoS) consensus mechanism on September 15, 2022 in an event dubbed “Merge”. This merger was an important part of Ethereum's roadmap to achieve high levels of scalability, decentralization, and security while maintaining sustainability. Unlike PoW, which requires the use of expensive hardware, PoS reduces the barrier to entry for validators by leveraging the use of cryptographic tokens as the core foundation of the consensus process.
Gas is a unit that measures the transaction fees users pay to conduct transactions on Ethereum. When the network is congested, gas can be very high and validators may prioritize transactions based on fees.
