The SEC postponed the ETH ETF despite liquidating $1 billion, Ethereum price remains bullish, could ETH target $4,500 next?
Despite a major setback for institutional participation in the Vanguard smart contract network and a volatile market on March 6, Ethereum traders doubled their bullish positions. Market analysis explores how this belief among speculative traders has influenced the recent continued rise in ETH prices.
Ethereum prices rose 9%, soaring from $3,500 to a peak of $3,900 in the daily time on March 6. The latest wave of gains in the price of ETH is noteworthy, as ETH withstood the downward pressure of two major bearish events. The cryptocurrency market suffered wild volatility as investors who made a profit when BTC hit an all-time high on March 5 inadvertently triggered a liquidation of more than $1 billion.
It was also previously reported that the US SEC postponed its decision to launch an Ethereum ETF product submitted by BlackRock and Fidelity. Despite two major events, ETH's market cap increased by another $48 billion in the daily hours on March 6, topping $3,900 for the first time in three years
The SEC was expected to issue a ruling as early as April 2024. However, the latest developments mean that the May 7 deadline for Vanguard's application is now the most important date that the ETH ETF may receive an approval ruling.
As observed in the Bitcoin market over the past month, the launch of the Ethereum ETF is expected to open the floodgates of institutional demand.
Typically, news of the SEC's delay in making such a ruling could put immediate downward pressure on the price of the underlying asset. Notably, ETH's share price surged 9% within 24 hours of news reports postponing the news, but ETH withstood the pressure from the bears.
Ahead of the upcoming Dencun upgrade, the dominant bullish expectations and positive discussions around the Ethereum ecosystem were important catalysts for the strong ETH price performance on March 6.
Market data shows that ETH speculative traders remain bullish despite the massive liquidation of BTC and other large altcoins.
The San\ti\ment Funding Rate indicator shows the total amount of fees paid daily between holders of perpetual futures contracts for a particular crypto asset. Fluctuations in funding rate trends can provide insight into speculative traders' propensity for short-term price movements.
Figure 1 shows that the ETH funding rate has remained high positive above 0.05% since the ETH price first crossed the $3,500 milestone on February 27.
Despite the bearish resistance on March 6, ETH bulls did not exit their positions. Instead, they doubled down on their bullish positions, pushing the funding rate to a peak of 0.09% in 2024.
The increase in the funding rate indicates that traders are confident that the price will rise further in the short term, and therefore offer higher fees to keep the contract open. Unsurprisingly, the price of ETH quickly soared above $3,900 within 24 hours of the funding rate spike. If this rare market trend continues, it is only a matter of time before the ETH price breaks above the $4000 mark based on historical trends.
Ethereum's journey to list ETFs in the U.S. may have suffered a setback. However, given the growing bullish beliefs in the ETH derivatives market, its path to regaining the $4,000 price level still appears to be unhindered.
The global inflow/outflow chart further confirms this stance: the latest price increase on March 6 actually brought the percentage of profitable ETH holders to over 97%.
Profitable holders tend to be reluctant to sell during the bull phase, and as a result, ETH is likely to hold at a relatively high support level above $3,500 until the next rally.
However, in the event of another bullish rise, the bulls will now only need to break above the $3,992 resistance level to break above the new high above $4,000.
As shown in Figure 2, 1.3 million addresses bought 493,080 ETH at the lowest price of $3,992. Therefore, if Ethereum's price is able to establish a stable support level above this range, then a new peak towards above $4,500 may be on the horizon, as predicted.
(Source: Ibrahim Ajibade, Brian Stone)