Why is Ethereum Price Up Today?

Why is Ethereum price up
Why is Ethereum price up

NOIDA (CoinChapter.com)— Ethereum (ETH) saw a notable price increase thanks to a combination of technical and fundamental factors. Some reasons why Ethereum price is up today include positive funding rates, increased open interest, and the Securities and Exchange Commission‘s approval of Spot ETH ETFs.

why is Ethereum price up today
ETH price over the past 7 days. Source: CoinStats

ETH price rose nearly 30% since May 20 to reach a daily high near $3,945 on May 27, highlighting the strong tailwinds pushing the token’s prices.

Funding Rate and Open Interest

One of the primary factors behind why Ethereum is up today is the favorable funding rate and rising open interest. The funding rate, a mechanism to keep the price of perpetual futures contracts in line with the underlying asset price, has remained positive.

why is Ethereum price up today
ETH OI-Weighted Funding Rate. Source: Coinglass

This indicates that long positions, those betting on price increases, are paying short positions. A consistently positive funding rate suggests strong bullish sentiment among leveraged traders, reflecting their willingness to pay a premium to maintain long positions.

why is Ethereum price up today
ETH Futures Open Interest.

The open interest, which measures the total number of outstanding derivative contracts, has also been on an upward trend. The increase indicates more money entering the market, reinforcing the bullish outlook.

Moreover, the spike in open interest coincides with the rise in ETH prices, suggesting growing confidence and participation in Ethereum’s upward momentum.

The correlation between increased open interest and price hikes typically signals strong investor interest and market confidence, further explaining why Ethereum is up today.

SEC’s ETH ETF Approval Could Be Why Ethereum Is Up Today

Another significant driver behind Ethereum’s price surge is the SEC’s recent decision to approve several Ether-based ETPs. On May 23, 2024, the SEC granted accelerated approval for the listing and trading of shares of Ether-based ETFs on major exchanges such as NYSE Arca, Nasdaq, and Cboe BZX.

The approval includes products like the Grayscale Ethereum Trust, Bitwise Ethereum ETF, iShares Ethereum Trust, VanEck Ethereum Trust, ARK 21Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, Fidelity Ethereum Fund, and Franklin Ethereum ETF.

why is Ethereum price up today
Traders believe the ETF approval could be a key bullish cue for ETH.

Moreover, the landmark approval is crucial for several reasons. First, it provides a regulated and secure investment avenue for both institutional and retail investors, which is likely to enhance the mainstream adoption of Ethereum.

With these ETFs, investors can gain exposure to Ethereum without directly purchasing the cryptocurrency, which mitigates some risks associated with holding and securing digital assets. Furthermore, the approval is also argues for the endorsement of Ethereum’s legitimacy and stability as an investment asset.

By meeting the SEC’s stringent regulatory requirements, the Spot ETH ETFs provide investors with a sense of assurance about introducing Ethereum to their portfolios. The euphoria from the regulatory nod could be a reason why Ethereum is up today.

Should ETH’s price rise like Bitcoin’s following Spot Bitcoin ETF approval and launch, it could reach $7,174.

ETH Price Forms Bullish Pattern

Meanwhile, ETH price has formed a bullish technical setup called the ‘bull flag pattern.’

why is Ethereum price up today
ETH price formed a bullish pattern with a 90% upside target. Source: Tradingview.com

A bull flag pattern forms when a crypto token’s price experiences a near-vertical rise, creating the flag pole. This pattern commonly emerges in assets that are in a strong uptrend.

Following the steep ascent, the asset undergoes a period of consolidation, which creates the flag of the pattern. Despite the initial strong rally, the price holds steady as buying pressure persists. Typically, a breakout from this consolidation phase triggers another significant uptrend.

The pattern reaches completion when the price breaks out from the flag area, effectively resuming the prior upward trajectory. Traders project the breakout’s price target by adding the length of the flag pole to the breakout price level.

According to the rules of technical analysis, if the token confirms the bullish technical pattern, ETH price might rally over 90% to reach the pattern’s theoretical price target near $7,420. It seems $7,000 is the target for the prime altcoin’s bulls.

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