Why is Ether (ETH) price up today?

Ether price rallies back toward a monthly high as the crypto markets heat up in anticipation of a potential spot BTC ETF approval.

Ether (ETH) price is witnessing a breakout on the back of increasing institutional interest in Bitcoin and the crypto market in general. The increased bullish sentiment pushed Ether price up above $2,400 briefly on Jan. 2 before the price pulled back slightly. The fact that ETH trades above $2,300 could indicate that increased attention is shifting toward Ether and over the past year, the altcoin has seen its price rise by 97.1%.

Let’s review a few of the reasons for Ether’s price strength.

Institutional interest soars as traders anticipate a spot ETH ETF

A surge in traders’ interest in Ether began on Nov. 5, 2023, when the U.S. Securities and Exchange Commission (SEC) acknowledged Grayscale Investment’s application to convert its Ethereum trust into an ETF.

The commission’s decision responded to a direct court order mandating it to review Grayscale’s pending ETF applications. To date, the SEC has not confirmed a spot crypto ETF. On Dec. 5, 2023, the SEC pushed the Grayscale spot Ether ETF decision until January 2024.

BlackRock, the world’s largest asset manager, filed for a spot Ether ETF on Nov. 9. The confirmation sent Ether’s price to a 6-month high above the $2,000 resistance. BlackRock filed the S-1 form with the SEC on Nov. 16, 2023.

As of Jan. 2, a total of seven spot Ether ETFs are filed and pending with the SEC.

Many analysts anticipate that the SEC will first approve a spot Bitcoin ETF in early 2024. Once that happens, many crypto analysts see a spot Ether ETF approval shortly after. In the past few weeks, the narrative of Ether turning bullish ahead of a spot Ether ETF approval has grown in popularity and with Bitcoin (BTC) price overcoming but struggling to remain above resistance at the $45,000 level, some traders have turned their focus toward ETH.

The anticipation of approval is leading to increased institutional capital inflows. For the last week of 2023, crypto products saw a total of $103 million in inflows.

Lido dominates Ethereum’s TVL

The total value locked (TVL) metric is a common way to examine the health and sentiment of a Proof of stake (PoS) blockchain like Ethereum. The Ethereum ecosystem TVL reached an all-time high on Nov 14, 2021, of $106.7 billion before sharply declining. In 2023, Ethereum began to see TVL steadily increase in large part thanks to liquid staking derivatives like Lido.

On Jan. 2, Ethereum TVL is up 3.7% to $29.8 billion with Lido (LDO) accounting for over 73% of all staked assets.

Outside of Lido, the top 10 Ethereum decentralized applications (DApps), have witnessed 7-day growth. Notably, Spark and Rocket Pool saw 18% and 7% respective TVL increases.

*Ethereum network DApps by TVL. Source: DefiLlama*

While Ether could struggle to turn $2,400 to support in the short-term, Bitcoin is maintaining dominance in the crypto market before the supply halving in April 2024. While Bitcoin dominance remains above 50%, it has declined since hitting 54% on Dec. 6, 2023. Typically, when Bitcoin dominance plateaus, there is a rush to altcoins and other cryptocurrencies.

*Bitcoin dominance versus the total crypto market. Source: NewHedge*

Vitalik Buterin, the co-founder of Ethereum, revealed his 2024 plan to tackle the shortcomings of the ecosystem.

While the current market looks healthy, macro factors like future rate hikes and the potential U.S. crackdown on the crypto sector may slightly weigh on Ether’s price. Factors such as a spot Bitcoin or Ether ETF approval, positive developments in clarifying regulators’ stance on crypto and a strong U.S. economy may prove to be catalysts for price growth.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.