[Coin Report] Ethereum Rally Finally Begins?… “Possibility of Breaking Through All-Time Highs Within the Year”

While Bitcoin (BTC) is in a lull, Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is expected to be the next to see a rally. This week, ETH has been tracing an upward curve, rising 6%. As of 3:17 pm on the 29th, based on CoinMarketCap, the ETH price has risen 5.79% from a week ago to $3,569.

The inflow of institutional funds through Ethereum spot exchange-traded funds (ETFs) has driven the rise in ETH prices. According to CoinGlass on the 29th, Ethereum spot ETFs have turned to net inflows for four consecutive trading days since the 22nd. Over the past four days, $224.9 million (about 313.6 billion won) has flowed into Ethereum spot ETFs. 0xScope, a blockchain analysis firm, analyzed that "the relatively low increase in ETH compared to BTC in November was due to the lack of institutional support. If an ETF that provides staking rewards is approved, it will lead to a large influx of institutional investment, greatly expanding the growth potential."

Currently, Ethereum spot ETF products listed on the US stock market do not have a staking function. Ethereum, where block verification is done through a proof-of-stake (PoS) consensus algorithm, can receive a kind of interest-like reward by staking ETH on the network. The US Securities and Exchange Commission (SEC) excluded this function when launching Ethereum spot ETF products, citing concerns about the securities nature of staking. However, with the resignation of Chairman Gary Gensler following Trump's election, there are expectations that the SEC's stance will change, and staking functionality will be added to Ethereum spot ETFs. Allowing staking functionality and the ability to receive additional rewards is expected to further increase institutional investor demand.

There is also an analysis that the recent meme coin craze, which has led the current bull market, is shifting to Ethereum-centric decentralized finance (DeFi). This is due to the fatigue of investors caused by the overheating of the meme coin market. Arthur Cheong, founder of DeFiantCapital, said, "As the extreme meme coin rally comes to an end on its own, traders are tending to look for tokens with fundamental value, and we have observed a flow of funds back to DeFi projects deployed on EVM chains such as ETH, Aave, Enna, and ENS."

In the industry, there are also forecasts that ETH will continue this upward trend and break through the $4,000 level. Ryan Rasmussen, head of research at Bitget, said, "With the inflow of funds into Ethereum spot ETFs and the demand for physical investment, ETH will break through $4,000. The continuous inflow of stablecoins is also providing liquidity to the cryptocurrency market, which is a positive factor. The inflow trend is unlikely to change in the short term, so the upward momentum is likely to continue."

There are also optimistic forecasts that ETH will break its all-time high by the end of the year. ShayanBTC, a contributor to Cryptoquant, said, "The recent rally in Ethereum has raised expectations that ETH prices will break through major resistance levels and reach a new all-time high by the end of the year. The steady rise in the funding rate of the Ethereum perpetual futures market over the past few weeks indicates that a bullish momentum is building among investors." ETH's all-time high was set in November 2021 at $4,891. On the 29th, the ETH price was 27% lower than this level.

Reporter Kim Jeong-woo

woo@decenter.kr