The demand for investment in leverage trading products based on Ethereum (ETH) is skyrocketing, indicating that the increasing strength could push the world's second-largest cryptocurrency past the psychological $4,000 mark.
Investors are increasingly looking to open leveraged Ether positions - allowing them to temporarily borrow to increase the size of their trading positions.
According to Vetle Lunde, Head of Research at K33 Research, the demand for the VolatilityShares 2x Ether leveraged ETF has increased by more than 160% since November 5. He wrote on X on November 28:
"Since November 5, the equivalent ETH exposure in the VolatilityShares 2x leveraged ETF has increased by an additional 278,150 ETH (+160%!). VolatilityShares now holds over half of the open contracts of ETH on CME (50.1%!!)."
The 160% increase in leverage demand occurred within three weeks of the election of US President-elect Donald Trump on November 5, reinforcing investors' appetite for risky assets like cryptocurrencies.
Although Ether's price has lagged behind Bitcoin, traders expect this to change as ETH price stabilizes. Based on emerging chart patterns, some analysts predict ETH will reach $20,000 at the peak of the 2025 bull cycle.
While the inflow into Ether ETFs is becoming more positive, the recent price increases of Ether may also be attributed to spot buying pressure.
This suggests that Ether is on track to gain more strength in the coming weeks, according to Ryan Lee, Head of Analysis at Bitget Research:
"The implied volatility of 1-day options has stabilized, indicating that the recent breakout above $3,600 was driven more by spot accumulation than speculative activity. This trend suggests ETH could continue to rise, and the ETH/BTC ratio, which has shown signs of bottoming and recovering, is worth watching."
This could set the stage for Ether to break past the $4,000 psychological level based on the technical chart formations shared by the renowned trader Wolf in a post on X on November 27:
"One view is like a 3-year cup and handle, with the major resistance at $4k. Once that's cleared, a measured move could put it above $15k."
The record inflow of stablecoins into exchanges in November may also contribute to Ether's price rise, Lee added:
"The steady net inflow of stablecoins is providing liquidity to the crypto market [...] This trend is unlikely to reverse in the short term, suggesting the market's momentum will continue."
Bitcoin's price reached a new all-time high of $99,800 on November 22 before experiencing a short-term correction to above $91,000, which some analysts predict could extend to 30% before breaking through the six-figure mark.
However, Bitcoin's oscillation below $100,000 could be a positive catalyst for Ether's price, according to the renowned analyst Rekt Capital, who wrote in a post on X on November 28:
"Bitcoin oscillating between $91,000 and $100,000 is very likely the formula for Ethereum to lead and facilitate capital inflows into smaller Altcoins."
Continued inflows into Ether ETFs may also contribute to ETH's price rise. Ether ETFs recorded a fourth consecutive day of positive net inflows worth over $90 million on November 27, according to data from Farside Investors.
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Vuong Tien
According to Cointelegraph
