Ether Surges to $4,050: A Short-Lived Spike or Long-Term Support?

1. ETH rallies 58% in 30 days, hitting $4,050, outperforming the crypto market.
2. Optimism surrounds a spot Ethereum ETF, potential “sell the news” scenario with SEC decision by May 23.
3. Dencun upgrade aims to cut transaction fees; Ether’s $480B market cap faces critics as pro traders express bullish sentiment with caution on excessive futures leverage.

In the past 30 days, Ether (ETH) has seen an impressive 58% rally, outperforming the broader cryptocurrency market by 14%. Despite struggling to sustain levels above $4,000, Ether hit its highest price in over two years, narrowing the gap with Bitcoin (BTC), which currently sits at $73,178.

ETF Optimism and “Sell the News” Scenario

Speculation arises regarding the surge being tied to optimism around the potential approval of a spot Ethereum exchange-traded fund (ETF). Some traders caution about a possible “sell the news” scenario. Further, anticipating a market correction once the ETF decision is fully priced in. Bloomberg analysts estimate the approval odds at 35%, with the U.S. Securities and Exchange Commission set to deliver its final verdict by May 23.

Factors beyond the ETF speculation contribute to Ether’s recent gains, including the upcoming Dencun network upgrade scheduled for March 13. This hard fork aims to significantly reduce transaction fees, a persistent issue for Ethereum, with fees standing at $4 or higher since November 2023.

Market Cap and Criticisms

Despite Ether being 19% below its November 2021 peak, its $480 billion market cap positions it among the top 20 global tradable assets. It is surpassing companies like UnitedHealth and ExxonMobil. Critics point to Bitcoin’s recent all-time high on March 12, emphasizing the need for Ether to break above $4,000 to establish long-term support.

Ether investors enjoy a 4% yield in the proof-of-stake consensus, and demand for ETH relies heavily on ecosystem activity. The Ethereum network boasts dominance, with consistent growth across decentralized exchanges (DEX) and aggregators. However, challenges arise in nonfungible token marketplaces, indicating varied usage across the network.

The annualized futures premium, or basis rate, recently reached its highest level in over 18 months. It is raising concerns about potential sell-offs if Ether fails to break above $4,000 while the futures premium remains high.