3 Reasons Why Ethereum Price Is Heading Towards $4,000

2024/11/13 03:20

Author: Nancy Lubale, CoinTelegraph; Compiler: Tao Zhu, Golden Finance

With Donald Trump winning the presidential election, the United States' growing interest in a cryptocurrency-friendly business environment has caused the price of Ethereum to rise by more than 37% in the past seven days to its highest level since July 24.

ETH/USD daily chart. Source: TradingView

At the time of writing, Ethereum is trading at $3,392, with increasing demand through spot Ethereum ETFs and on-chain metrics suggesting the altcoin’s uptrend remains intact.

Ethereum Open Interest Hits All-Time High

Ethereum’s rally over the past seven days has been preceded by an increase in ETH long positions in futures markets. Data from on-chain market intelligence firm CryptoQuant shows that Ethereum’s total open interest in derivatives markets increased from 9.8 million ETH on November 5 to an all-time high of 13.2 million ETH on November 11. ETH open interest across all exchanges. Source: CryptoQuant “ETH has finally hit a new all-time high on futures OI, suggesting that interest in the big brother of altcoins is finally returning,” trader Alan said in a post on X, adding that the market can never ignore ETH.

Trader Olek believes that Ether’s rising OI indicates “rising liquidity and market participation.”

Olek added:

“Ethereum is signaling a recovery and its increased activity suggests the market is ready for action.”

ETH Demand Increases

Demand for ETH appears to be gaining traction again as on-chain activity increases, as evidenced by the number of daily active addresses (DAA) on the Ethereum blockchain, CryptoQuant data shows. The chart below shows that Ethereum’s DAAs have increased from 306,751 on November 5 to 388,350 at the time of writing on November 12. This is a 26% increase after Donald Trump won the 2024 U.S. presidential election last week.

Number of active addresses on Ethereum. Source: CryptoQuant

As a result, on-chain data shows that users are increasingly interacting with layer 1 blockchains, which indicates an increase in Ethereum transaction volume.

According to DappRadar, active addresses for Ethereum DApps have increased by 8% over the past seven days. Overall, these are encouraging figures considering that other DeFi metrics such as total value locked, number of transactions, and NFT trading volume have also grown significantly over the past week.

US Spot Ethereum ETF Inflows Reach $295 Million

Ethereum began to recover after Trump's victory, and spot ETH ETF fund flows turned positive, with net outflows of $73 million in the last two days before the November 5 election.

According to SoSoValue data, these investment products recorded their largest single-day inflows since their launch on July 23 on November 11, with inflows of more than $295 million.

Ethereum ETF spot flow. Source: SoSoValue

Fidelity Ethereum Fund (FETH) led with a record inflow of $115.5 million, while the iShares Ethereum Trust ETF (ETHA) issued by BlackRock ranked second with an inflow of $101 million.

The Grayscale Ethereum Mini Trust ETF (ETH) came in third with $63.3 million in inflows, while the Bitwise Ethereum ETF (ETHW) recorded $15.6 million. All other U.S. spot Ethereum ETFs saw zero inflows.

Additional data from CoinShares showed that inflows into Ethereum investment products totaled $157 million in the week ending November 8, bringing year-to-date inflows to $915 million and AUM to $12 billion.

CoinShares said in an accompanying comment that this was the "largest inflow since the ETF launched in July this year, marking a significant improvement in market sentiment."

The latest inflows continue a notable trend that began a week ago, indicating that institutional demand for Ethereum investment products continues to increase, potentially driving its price to its March 12 high of more than $4,000.