The anticipation surrounding the potential approval of spot Ethereum ETFs in the United States has fueled a significant rally in Ethereum (ETH) prices. Over just two days, ETH surged by more than 26%, reaching its highest level since mid-March. Although the price has retraced slightly after nearing $3,800, strong fundamentals, on-chain metrics, and growing institutional interest suggest the upward trend remains robust.
Rising Open Interest in Ethereum Futures
A major factor supporting Ethereum’s bullish momentum is the increase in open long positions within the futures market. According to data from the on-chain intelligence firm CryptoQuant, total Ethereum open interest in the derivatives market climbed from 2.8 million ETH to 3.2 million ETH on May 20. This marks the highest open interest recorded since January 2023.
As CryptoQuant analysts highlighted:
“Traders in the perpetual futures markets actively opened Ethereum long positions expecting price increases, following rumors that the U.S. SEC might approve a spot Ethereum ETF as early as May.”
In dollar terms, Ethereum’s open interest reached a record high of $14.68 billion. Elevated open interest often signals strong underlying market trends and sustained investor confidence.
Traders Favor Ethereum Over Bitcoin
The possibility of spot Ethereum ETF approval has sparked discussions among analysts regarding its potential market impact. Current data suggests traders are showing a growing preference for Ethereum compared to Bitcoin.
CryptoQuant’s analysis indicates that buy orders for ETH in the perpetual futures market currently outnumber sell orders. A buy-versus-sell ratio above 1 implies more market participants are looking to go long, creating upward price pressure.
Additional data reveals that traders are more willing to hold Ethereum on margin compared to Bitcoin. A higher ETH/BTC open interest ratio indicates increased exposure to Ethereum relative to Bitcoin.
Supporting this shift, TradingView data shows the ETH/BTC pair rising by 19.6% from a low of $0.04572 on May 20 to a two-month high of $0.06471 on May 21. This reflects Ethereum’s strengthening performance against Bitcoin. With a Relative Strength Index (RSI) reading of 68, the ETH/BTC pair shows strong upward momentum.
Increased Accumulation by Permanent Holders
On-chain data reveals a notable increase in ETH accumulation by long-term holders, often referred to as "permanent holders." These are addresses that accumulate Ethereum and rarely sell.
Following rumors of ETF approval, permanent holders purchased over 100,000 ETH on May 20—the highest daily accumulation level since September 2023. This surge in buying activity from committed investors underscores renewed confidence in Ethereum’s long-term value.
Prominent analyst Ali Martinez shared similar observations, citing Santiment data that showed increased accumulation by ETH whales on the same day.
Moreover, market intelligence from Santiment indicates that while sentiment around Bitcoin and Solana remains bearish, optimism around Ethereum has reached its highest level since September 2023. The overall crypto market mood is also bullish, with the Crypto Fear & Greed Index jumping from 64 (Greed) to 76 (Extreme Greed) within a week.
This shift suggests growing positivity among retail investors. If the SEC approves a spot Ethereum ETF this month, Ethereum’s price is likely to sustain its upward trajectory.
Frequently Asked Questions
What is driving the recent price increase in Ethereum?
The recent surge is largely driven by growing expectations that the U.S. SEC will approve a spot Ethereum ETF. This has led to increased buying activity in both spot and derivatives markets.
How does open interest affect Ethereum’s price?
High open interest in futures markets indicates strong investor interest and can signal continued price momentum. It reflects more market participants taking positions, which often reinforces the current trend.
Why are traders favoring Ethereum over Bitcoin recently?
Recent speculation about Ethereum ETF approval has shifted short-term trader interest toward ETH. Data shows higher buy order volume and increased margin exposure to Ethereum compared to Bitcoin.
What are “permanent holders” in the Ethereum market?
Permanent holders are long-term investors who accumulate ETH and rarely sell. Increased buying from these holders often indicates strong belief in Ethereum’s future value.
What is the Crypto Fear & Greed Index indicating now?
The index has moved into “Extreme Greed” territory, suggesting high optimism among retail investors. This often correlates with bullish market conditions but may also signal over-enthusiasm.
Where can I learn more about trading strategies during market rallies?
For those looking to deepen their understanding of market trends, you can explore more strategies and real-time analysis tools available online.