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The market capitalisation of Ethereum has now surpassed that of the world’s biggest banks. It currently rates higher than JP Morgan Chase, Bank of America, and Wells Fargo, among others, in terms of market capitalisation.
Furthermore, unlike Bitcoin, Ethereum stocks on spot and futures markets have been declining. This is likely to have exacerbated the sell-side cash squeeze. This lowers the liquidity of the Ethereum ecosystem, but its improved accessibility is expected to fuel demand even higher.
Another metric to remember for traders’ bullish optimism is the historically strong activity from ETH’s top stakeholders over the past week. This covers the 4-hour span on May 5 when over 6300 ETH transactions (worth $100,000) were processed. This flurry of action began on May 3, and it led to the rally to the $4200 mark.
In the short term, another factor behind ETH’s price rise is the US institutional spot offer. Long-term, the rally’s breaking of the $4000 mark for the first time in two days is a motivating factor. The YTD ROI is now at 450 percent. As the narrative surrounding DeFi ventures has overshadowed the digital gold narrative, this activity has resulted in ETH cutting into BTC’s market share. Furthermore, as DeFi ventures promise double-digit returns within weeks of ETH’s rally, the digital gold story seems to have taken a back seat.
Unlike DeFi, the ETH rally is largely propelled by spot demand, with financing costs, stock spreads, and free participation in projects all at levels conducive to driving demand higher. This has meant that retail leverage-driven flows have been subdued, leading to the proof of a positive mood at the current price level.
Traders are also expecting ETH to flip BTC with the bullish price activity, since it currently has half the market capitalisation of BTC, according to coinmarketcap.com numbers. The fact that the current rally is not fueled by memes provides insight into the ETH network’s maturity and fundamental development. The investment inflows into ETH may quickly filter down to top-ten altcoins, enabling another altcoin rally until the emphasis turns to Bitcoin’s S2F goals for 2021.