What’s Driving Ethereum Price Rally? 4 Factors Behind the Surge

The Ethereum price surged by 2.24% during the U.S. trading session on Tuesday, stabilizing at $2,345 and boosting its market cap to $283.4 billion. While some analysts attribute this recovery to a general market uptick ahead of the anticipated U.S. Federal Reserve rate cut, Ethereum shows more growth potential due to increased staking activity and renewed interest in options.

Why Is Ethereum Price Rising?

To understand why the ETH price has been increasing over the last 24 hours despite dropping steadily over the last two months, there is a need to ignore the influencers’ noise and consider the facts:

• 4,000 new investors are staking ETH.
• Ethereum’s current cycle shows greater resilience.
• There is renewed interest in Ethereum options.
• ETH price bottom could be in.

1. 4,000 New Investors Stake $502M ETH

Ethereum is one of the most decentralized projects aside from Bitcoin in terms of the sheer number of validators securing the network. There are 1,583,035 validators currently running over 14,000 nodes and earning 4.6% APY. Data from the Beaconchain Explorer shows a significant spike in staking inflows and the number of depositors since September 11, when US CPI data came in dovish. 

The positive CPI prompted boosted investor confidence in a potential rate cut on September 18, resulting in a spike in the amount of ETH staked to 130,000 ETH by over 4,000 investors.

2. Current ETH Cycle Shows Greater Resilience

The bear market that just ended resulted in a loss of up to 46%, compared to the bear winter of 2018, which saw profitability drop by only 3%. According to IntoTheBlock, Ethereum has demonstrated more resilience in this cycle than any other.

📊 61% of Ether holders are currently in profit.

During the recent bear market, the percentage of profitable holders dropped to a low of 46%, while after the 2017 cycle, it fell to just 3%.

This comparison reveals two key insights:

Increased Resilience: Ethereum's current… pic.twitter.com/GqfIA7tgAi

— IntoTheBlock (@intotheblock) September 16, 2024

Many holders are still in profit even though the Ethereum price has been declining since March 2024. This shows the inherent value in the asset to surge in the future and could be what is attracting investors back in.

3. Renewed Interest in Ethereum Options

The Ethereum options market experienced recovery caused by increasing interest in Ether among investors. They purchased more than 20,000 Call option contracts with a target price of $3,000 by December 27 this year. This is a signal of bullish sentiment.

QCP: Options market saw a sudden revival of ETH interest. With over 20k contracts being bought targeting 3k levels by 27-Dec. Despite some short term uncertainty, and potential drawdowns. We still favour locking in yields ahead of the rates cut and positioning for bullish…

— Wu Blockchain (@WuBlockchain) September 14, 2024

It also signifies that the investors are optimistic about a rate cut tomorrow and, hence, willing to bet bullish on the Ethereum price.

4. Ethereum Bottom Could be In

Ether’s correction against BTC after rising to $2,800 in late August 2024 could be signaling a price bottom ahead of a full-blown recovery. Analysts are calling the bottom on the ETH/BTC chart, citing that historically, each ETH bottom triggers an explosive price movement that surpasses the previous all-time high (ATH).

Ethereum price prediction shows that ETH is ready to go for a 6% relief run in preparation for a complete bullish reversal. This will put the ETH price around $2,500.

Conclusion

The continuous struggle between Ethereum and Bitcoin has become more visible as ETH seems to be losing to BTC. Nevertheless, there is enough evidence to support a bullish thesis on Ethereum in the coming months.

Frequently Asked Questions (FAQs)

1. Why is the Ethereum price rising today?

Ethereum price has seen a 1% increase in the last 24 hours, despite a recent downturn. This rise is driven by several key factors, including an influx of new ETH stakers, increased resilience in Ethereum’s current market cycle, renewed interest in Ethereum options, and signs that the price might have hit a bottom.

2. How does Ethereum current market cycle show greater resilience?

In comparison to the bear market of 2018, where Ethereum saw a drop in profitability by 3%, the current cycle (ending September 2024) shows a more significant loss of 46%. However, many ETH holders remain in profit, reflecting Ethereum’s resilience and long-term value, which could be attracting new investors.

3. Could Tether (USDT) overtake Ethereum in market cap?

Tether is currently $160 billion away from overtaking Ethereum’s market cap, making it a significant threat. However, Ethereum’s recent resilience and staking activity suggest that it may hold its position for now.

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Evans Karanja

Evans Karanja is a crypto analyst and journalist with a deep focus on blockchain technology, cryptocurrency, and the video gaming industry. His extensive experience includes collaborating with various startups to deliver insightful and high-quality analyses that resonate with their target audiences. As an avid crypto trader and investor, Evans is passionate about the transformative potential of blockchain across diverse sectors. Outside of his professional pursuits, he enjoys playing video games and exploring scenic waterfalls.

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