Ethereum (COIN: $ETH) Breaks Past $3K on ETF Hype and Dealer Hedging

Ethereum (COIN: $ETH), the second largest crypto by market cap, is trading just above the $3K point after experiencing a 29.7% surge between February 6 and February 20, 2024.

Why Ethereum is Rising

Analysts attribute the surge to a drop in supply as demand for DeFi applications rises and the proof-of-stake burn mechanism. Crypto expert Ryan Sean Adams said, “Ethereum hasn’t even hit its demand season yet.” He added that there is “not enough ETH to go around.”

Another catalyst for an Ethereum price surge is the Duncan upgrade, slated for March 13, 2024. The upgrade will include proto-danksharding, improving the networks’ scalability and transaction costs.

The price of Ethereum has surged 30.2% YTD, compared to Bitcoin’s 15.7% gain in the same period. That is a huge change from 2023 when Bitcoin was leading the surge.

Ethereum’s most recent price was $3,061.72, surpassing the $3K resistance point for the first time in nearly three years. Meanwhile, Bitcoin is trading at $51,110.31, with a market cap of over $1 trillion for the first time in over two years.

Bitcoin’s recent surge was driven by the SEC’s approval of 11 Bitcoin ETFs, boosting demand. Additionally, anticipation regarding the upcoming Bitcoin halving event has increased the price of Bitcoin. Since the SEC approved the 11 Bitcoin ETFs in January 2024, the inflows have surpassed $5 billion.

How An Ethereum ETF Could Boost Price

Since the SEC approved the Bitcoin ETFs, excitement has been building over the potential approval of an Ethereum spot ETF. Overall excitement in the crypto market has pushed the total market cap over $1 trillion for the first time since the crypto bull run of April 2022.

Various investment firms, such as Ark 21Shares and VanEck, have applied for an Ethereum spot ETF. According to a Bloomberg report, analysts from Standard Chartered believe an approval could be coming in as soon as May 2024.

How Dealer Hedging Pushed Ethereum Past $3K

Dealer hedging is another factor that has pushed the ETH price above the $3K psychological barrier. Options dealers bought ETH in spot/futures markets to hedge their short bets in call options. Their actions helped to add to bullish momentum, according to Griffin Ardern from BloFin.

Ethereum Price Forecast

Based on all the factors above, crypto analysts are confident that Ethereum could reach the March 2022 price of $3,300. However, the likelihood of Ethereum maintaining its bullish momentum relies on Bitcoin maintaining its bullish momentum. Historically, Bitcoin and Ethereum’s price correlation has been quite high.

Is ETH A Buy?

Most crypto analysts anticipate the ETH bullish momentum to hold until the Bitcoin halving. They also expect the excitement around an Ethereum Spot ETF approval to maintain positive price pressure. Consequently, while the price of ETH is already quite high, there is still room for upward movement.

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