Ethereum Surpasses a Significant Threshold in Comparison to Bitcoin, Igniting Discussions on a Potential Rialtist Cycle
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In the past few weeks, Ethereum has been on a strong bullish trajectory, outperforming Bitcoin by 124% from its April lows. At the time of writing, Ethereum is valued at around $4,500, just 2.67% away from surpassing its all-time high (ATH) of $4,867.
Over the past month, Ethereum has gained around 60%, with the momentum further strengthening over the past week, up over 27%. This surge has been fueled by a series of factors, including high daily transaction volumes, growing network utility, and shrinking exchange supply.
The surge in Ethereum's network activity reached a record of around 1.875 million daily transactions in August, a significant increase from the previous levels. This spike in on-chain activity coincided with Ethereum's price rallying sharply from about $3,150 in late July 2021 to near its then ATH.
The high daily transaction volumes reflect increased demand for Ethereum's blockchain, which powers DeFi platforms, NFTs, and various applications requiring ETH usage. This increased demand is a clear sign of growing network utility and user engagement, as evidenced by climbing transaction counts.
Moreover, the shrinking exchange supply of ETH means fewer coins are available for sale on exchanges, reducing selling pressure and pushing prices higher. This dynamic, combined with the increased network activity, has contributed significantly to Ethereum's price approaching a new all-time high.
Institutional demand for Ethereum is also on the rise, as demonstrated by $729.1 million in inflows to Ethereum Spot ETFs in a single day. On August 12, Ethereum saw a massive net inflow of 186,000 ETH, coinciding with a price peak of $4,589.
However, it's important to note that a series of short position liquidations could be triggered by Ethereum reaching a new all-time high, potentially increasing market volatility. Nearly $2 billion worth of short positions could be wiped out, forcing traders to buy back at higher prices and accelerating the rally.
In contrast, Ethereum's Netflow SMA30 is currently at -40,000 ETH, indicating investors are moving funds to cold storage. This suggests a degree of caution among investors, which could potentially limit the upside in the short term.
Looking ahead, if this bullish run continues, Ethereum could set a new all-time high. However, market volatility is expected to remain high due to the potential for short position liquidations and the ongoing shift in investor sentiment.
[1] Data from CryptoQuant and Messari [2] Data from Ethereum's 2025 roadmap [3] Data from Ethereum's 2021 Q2 report
- The surge in Ethereum's price and network activity has attracted interest from various sectors, especially finance, with institutional investors increasingly investing in Ethereum-focused products like ETFs.
- As Ethereum approaches its new all-time high, technology plays a crucial role in driving this growth, with the blockchain's utility in powering DeFi platforms, NFTs, and various applications necessitating investment in technology to scale up its operations and accommodate increasing user demands.
