Ethereum’s Stunning Surge: Will the Rally Continue?
TL;DR:
- The Ethereum price topped US$4,600 amid mounting demand from institutional investors.
- Cryptocurrencies staged a broad rally on risk-on sentiment as tame US CPI data fuelled the Fed rate cut bets.
- Technical signal points to a potential near-term pullback, though the long-term rally may sustain
Ethereum’s stunning surge lifts it to a multi-year high – will the rally continue?
Ethereum price topped $4,600 before paring gains, an 8.4% rally over the past 24 hours at 8:48 am Singapore time, according to BitMEX data. The world’s second-largest cryptocurrency jumped 17% over the past five days, and is up by 31% in August, now just 6% away from its all-time high in November 2021.
Ethereum’s market cap now stands at $551 billion, behind Bitcoin’s $2.38 trillion. Year to date, the token has risen 38%, outperforming Bitcoin’s 29% increase. The stunning performance has been driven by strong institutional demand, a favourable macro backdrop, and regulatory tailwinds.
Ethereum ETF Inflows hit a new high
According to Farside, Ethereum ETF inflows reached US$1,018.8 million on 11 August, with BlackRock leading at US$639.8 million. Figures from CoinGlass’ data show that open interest in Ethereum futures surged to US$62.7 billion in the early hours of 13 August, the highest on record.
Institutional buying interests have also been bolstered by speculation that the US government may adopt Ethereum as the secondary Treasury reserve asset after Bitcoin. A US Securities and Exchange Commission filing on Tuesday revealed that the two largest corporate holders of Ethereum, BitMine and Sharplink Gaming, have raised their stock at-the-market offerings by US$24.5 billion and US$389 million, respectively. The latest moves by the two companies will bring their total Ethereum holdings to US$5 billion and $3 billion in value, respectively.
Risk-on sentiment extends rally in digital assets
On Tuesday, risk-on sentiment continued to boost bullish trends in risk assets after US inflation data came in cooler than expected, reinforcing expectations of a September rate cut by the Fed. The CME FedWatch tool now shows a 95% probability of a 25 basis point cut, up from 57% a month earlier. Lower interest rates typically boost market liquidity conditions, and digital assets have historically rallied during easing monetary cycles.
Alongside a record run on Wall Street, cryptocurrency markets have also jumped following the CPI data release. Besides Bitcoin and Ethereum, XRP and Solana have risen by 4% and 10% over the past 24 hours.
Ethereum test key resistance
ETH/USD Spot price – daily chart
The Ether token is testing resistance at the 161.8% Fibonacci extension level. While a possible retreat is expected at such a level, as Stochastic has entered an overbought territory, the strong bullish momentum will likely fuel its further rally in the longer term, with the next potential target at its previous high of $4,868 in November 2021. In the near term, the support is expected to be around $4,100, which serves as a key resistance-turned-support level.
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