The price of Ethereum, Ethereum’s own cryptocurrency, hit all-time highs above $ 2,550 this Thursday on Coinbase, Binance, Bitstamp and other leading exchanges. The rate of the second largest cryptocurrency exceeded the level of $ 2,500 today at about 13:30 Moscow time. Growth over the past day is 13.5%. According to CoinGecko, at the same time, the capitalization of the main altcoin approached $ 300 billion. A year ago, it was $ 20 billion. This puts it above companies such as Exxon Mobil, Intel and Coca-Cola in terms of capitalization.
Not all traders were prepared for new highs. According to Bybt, the volume of liquidations on the ether market in the last hour was $ 28.24 million. Bitcoin’s value is $ 29.94 million. 95.3% of liquidated positions were short. On Sunday, when the price of ETH bounced back below $ 2,000 along with the broader crypto market, the liquidation volume of long positions exceeded $ 1 billion. The high leverage prevented these traders from further rallying in ETH without adding deposits.
Historically, the ETH margin trading segment has seen significantly higher demand to borrow assets to open long positions. In recent days, the ratio of long and short positions on ETH has dropped to the lowest level since December 2018, reflecting the bearish expectations of market participants.
The ratio of long and short positions in the ETH market of the Bitfinex exchange
At the beginning of the week, three Ethereum-ETFs launched by Evolve, Purpose Investments and CI Global Asset Management began to circulate on the Canadian market at once. The latter develops cryptocurrency products in collaboration with Mike Novogratz’s Galaxy Digital. Earlier, the local regulator allowed several bitcoin ETFs to trade, while the US Securities and Exchange Commission is still thinking about this.
“While Bitcoin tends to attract a lot of attention since it became the first major cryptocurrency, Ether and the Ethereum ecosystem represent one of the most prominent technological visions in modern society,” said Som Seif, founder and CEO of Purpose Investments.
There is a growing consensus among analysts that high Ethereum performance promises a favorable period for the altcoin segment in the summer. Particularly noteworthy in this regard is the behavior paired with Bitcoin. It is currently trading at the August 2018 level. The founder of Real Vision Group, Raul Pal, noted the formation of a “giant rounded bottom on the chart” and predicted a sharp exit from the structure upwards.
“At the current stage of the risk cycle and with ETH 2.0 approaching (reduced commissions and offerings), I am forcing myself not to sell all BTC in order to move the entire key position to ETH. To be clear, I categorize myself as a BTC bull in every possible way, but I think that ETH is now better suited for placing assets in terms of performance, ” Pal wrote. “When you consider everything from DeFi, NFT, community tokens, and even to the metaverse, everything that is included in the price of ETH, including developer time and so on, ETH is rapidly becoming the currency of the digital world, while Bitcoin remains a companion and baseline level.” …
“Please note: ETH / BTC is gearing up for an epic breakout. I think Ethereum now holds the title of the most interesting asset in the world, “Larry MacDonald, the author of the Bear Traps Report mailing list for traders, said earlier, referring to the recommendation of his billionaire friend.
“The range in which cryptocurrency has been accumulating for more than two years in the most important altcoin market has been broken,” said an analyst at Byzantine General. “You have no idea what will happen to the violas.”
Nevertheless, for investors who find themselves in the right coins, the altcoin season has already arrived, as can be seen, for example, in the space of decentralized finance and Dogecoin.
“The scams on the Binance Smart Chain blockchain climb 45,000 times per month. Random memes are pumped 7x per day. 15-year-olds become millionaires from the first deal. Crypto Twitter virgins with their boomer coins: “Altcoin season is coming soon,” writes popular crypto community member and host of the UpOnly CryptoCobain podcast.
The growth in the cost of ether is also supported by the ongoing withdrawal from circulation of cryptocurrency coins contributed to the Ethereum 2.0 deposit contract. Today the value for the first time exceeded $ 10 billion. The rate of asset growth accelerated at the beginning of the month.
Currently, almost 4 million ETH are blocked in the contract, contributed by 6,464 unique depositors, each of which, on average, owns more than 20 validators. The average amount deposited by each of them is 640 ETH worth $ 1.65 million at the current exchange rate. Obviously, this value includes exchanges and specialized staking services that collect the assets of many users. It is also worth considering that accepting deposits in Ethereum 2.0 began back in November 2020, when 1 ETH cost about $ 400. Thus, the fears that early stakers could become holders of the depreciating asset without the possibility of its withdrawal and sale did not come true.
According to the CryptoQuant analytical platform, the exchange’s Ethereum balances continue to decline, showing a correlation with the price of the cryptocurrency.
Zap Protocol co-founder Nick Spanos notes that the pending activation proposal to improve Ethereum EIP-1559 will make ether a “deflationary asset.” EIP-1559 includes a mechanism that will burn most of the transaction processing fees that have been going to miners all this time.
“This feature will reduce the supply of coins and have a corresponding impact on the price, attracting new buyers,” – he said.
“Ethereum’s net annual emissions will drop significantly following the merger of ETH 1 with ETH 2 during Phase 1.5,” added Messari analyst Wilson Whitiam. “After the merger, the pressure on ETH will drop by 90%. For bitcoin, such a decline occurs in three halvings. Again, ETH will experience the equivalent of three halvings over the next 12 months, ”said developer Justin Drake.
At the same time, the bitcoin dominance index after the recent depreciation of the first cryptocurrency fell below 50%, yielding the dominant market share to altcoins. The share of bitcoin has been sharply declining since the beginning of the year, despite the impressive growth of the first cryptocurrency’s own rate. It has not gone down to such levels since 2018. Historically, the fall in the bitcoin dominance index did not end by 50% and continued under pressure from the temporary dominance of altcoins.
“The previous pullback in the Ethereum market came in tandem with a drop in bitcoin hash rate due to a blackout in Xinjiang over the weekend. Nevertheless, Ethereum is gaining momentum and is ready to renew the highs around $ 3,000 by the end of April, ”added Spanos.