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As the cryptocurrency market teeters on the brink of a new era, Ethereum (ETH) is at the forefront, with signs pointing to a looming bull market.
In an unexpected development, the SEC approved the first-ever ETH ETF last week, resulting in a 27% weekly increase in the price of the second-largest cryptocurrency. At the time of writing, ETH is up 2.34% in the past 24 hours to $3,941, hitting an intraday high of $3,950.
Kaiko, a leading provider of cryptocurrency market data, attempts to answer the question of whether Ethereum is heading for a bull run in its latest data report.
The first indicator is the derivatives market, where Ethereum's open interest and funding rate provide insight into trader sentiment.
Sentiment around ETH has shifted dramatically after the U.S. Securities and Exchange Commission unexpectedly approved plans for a Spot ETH ETF.
The rapid turnaround in ETH sentiment was also evident in the futures market: within three days, ETH perpetual futures funding rates rose from their lowest level in over a year to their highest level in months.
Open balances hit a record high of $11 billion, signaling heavy capital inflows into the industry. The ETH-to-BTC ratio, which measures the relative performance of the two assets, rose to 0.055 from 0.044, though remains below February highs.
Another metric, ETH Cumulative Volume Delta (CVD), reveals that the current ETH rally is widespread, with significant net buying in both the U.S. and international spot markets since May 21, suggesting widespread optimistic sentiment globally. Notably, prior to that, international exchanges had recorded net selling.
The third and perhaps most obvious metric is market depth, which is broadly defined as the ability of a market to sustain relatively large market orders without impacting the asset price. According to Kaiko, the market depth for ETH on CEX is around $226 million, 42% below the average pre-FTX level, with only 40% concentrated on US exchanges. This is a significant decrease compared to around 50% in early 2023.
Kaiko noted that Ether's approval means a lot for the asset and will be a positive for the cryptocurrency even if inflows disappoint in the short term, as it removes some of the regulatory uncertainty that has weighed on Ether's performance over the past year.
