Ethereum price is holding above the $3,200 psychological mark, bolstered by Bitcoin’s positive price action and the anticipation of the Dencun upgrade.
ETH $3,259 is up today, rallying 0.27% over the last 24 hours to trade at the $3,257 level. Ether’s price is up 11% over the last seven days, mirroring Bitcoin’s
BTC
$57,227 16.3% price increase over the same period.
Ether’s upside momentum can be attributed to Bitcoin reaching a more than two-year high of $57,000 and the anticipation of the Dencun upgrade.
ETH/USD 1 day chart. Source: Tradingview
Bitcoin breaches $57,000, bolstering Ether investor sentiment
Bitcoin rose above the $57,000 mark on Feb. 27 for the first time since Nov. 2021. As the world’s two largest cryptocurrencies are historically correlated in price, Bitcoin’s price action also bolstered investor confidence in Ether.
Crypto Fear & Greed Index. Source: Alernative.me
Following Ether’s rally, the Crypto Fear and Greed index rose to a two-week high of 79, signaling extreme greed among investors. Last month, the index averaged 54, signaling neutrality. The Crypto Fear & Greed index is a multifactorial measure of crypto market sentiment.
Adding to investor confidence, the spot Bitcoin exchange-traded funds in the United States broke an all-time high of $2.4 billion in daily trading volume on Feb. 26, according to Eric Balchunas, a senior ETF analyst at Bloomberg.
Bitcoin’s current pre-halving rally is having a significant impact on the funds flowing into Ether, which will likely rotate into smaller altcoins over the next weeks, according to a Feb. 27 X (formerly Twitter) post by pseudonymous crypto analyst Rekt Capital.
“We’re already seeing this Bitcoin Pre-Halving Rally tremendously impact money flow into ETH. ETH has rallied +43% this month”
Ether futures open interest on Binance reaches all-time high
Ether futures open interest on Binance, the world’s largest cryptocurrency exchange, reached a new all-time high of $3.88 billion on Feb. 26, according to Coinglass. Binance’s previous all-time high of $3.31 billion in Ether open interest was breached on Nov. 3, 2021, when Ether was trading above $4,400..
Ether futures aggregate open interest on Binance, USD. Source: Coinglass
The increased demand for Ether leverage has caused the total Ether futures open interest to rise to $10.54 billion, according to Coinglass data. Ethereum’s open interest hit an all-time high of over $11 billion in Nov. 2021, shortly before Ether fell 55% from its all-time high of $4,891.
Ether futures aggregate open interest, USD. Source: Coinglass
Dencun upgrade is just around the corner
Besides Bitcoin’s rally, Ether’s price action can also be attributed to anticipation around the Dencun upgrade, scheduled for March 13.
The upgrade aims to reduce transaction costs and increase the scalability of the Ethereum network by introducing the concept of proto-danksharding. This mechanism seeks to make transaction data temporarily available in a more cost-effective “compressed” format.
The Dencun upgrade is the primary reason for Ether’s positive price action, according to a Feb. 23 report by Grayscale Research. The report states:
“With Ethereum’s planned Dencun upgrade in March, Ethereum is on the cusp of “growing up” through a pivotal transformation aimed at addressing its scalability challenges. We believe that the recent price performance reflects the market’s anticipation of this upgrade, as Ethereum (up 26% YTD) has outperformed the broader Smart Contract Platforms Sector (up 3% YTD) since January 1st, 2024.
