Why Ethereum investment flows depend on the Bitcoin surge

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The implications of Elon Musk’s tweets and Twitter’s bio-update have been felt around the Bitcoin ecosystem, with the crypto price reacting the same in the last 72 hours. In reality, in a 24-hour span alone, Bitcoin’s price rose by more than 18 per cent, fuelled by Musk’s tweets and institutional demand.

In response to the same, Bitcoin registered over 1.25 million active addresses and $95.83 billion of Bitcoin on-chain transactions. Now, the important question is, was there any spillover to Ethereum?

Ethereum’s price increased by more than 5% during the same period of time. What does this mean? Well, this means that there has been some spillover, with investment flows switching from Bitcoin to Ethereum. Furthermore, in the sense of the latest Bitcoin rally, it is also worth noting that the active supply of Ethereum continues to decline. In reality, the Last Supply Active 3y-5y (1d MA) dropped to a 4-month low of 18.6 million ETH, based on data from Glassnode.

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While the active supply has been decreasing for some time now, why is it signalling a shift this time around? Well, since investment flows are a critical component of the increase in Ethereum’s volatility, trade volume, and price, with decreasing active supply and lack of narrative supply critical to Ethereum’s price rally.

The rise in institutional investment flows from Bitcoin traders and the launch of CME ETH Futures has improved trading volume and exchange demand. Additionally, just a few hours ago, the ETH means that the fees charged reached an ATH of $19.95. These are the metrics that suggest that Ethereum’s price is heading towards its next peak after reaching the ATH of $1815.96.

The rise in institutional investment flows from Bitcoin traders and the launch of CME ETH Futures has improved trading volume and exchange demand. Additionally, just a few hours ago, the ETH means that the fees charged reached an ATH of $19.95. These are the metrics that suggest that Ethereum’s price is heading towards its next peak after reaching the ATH of $1815.96.

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