Current Position of ETH Bulls Following a 17% Weekly Surge

Ether’s prospects for exceeding $5,000 hinge on institutional accumulation, yet rising competition and subdued derivatives metrics contribute to cautious investor sentiment.

Key Insights:

Ethereum leads with a TVL of $100 billion, despite a decline in user activity as rivals offer lower fees.
Institutional buying through spot ETFs and company reserves could precipitate a supply shock in Ether, pushing prices past $5,000.

Ether (ETH) saw a 14% increase this past week, surpassing the $4,500 benchmark for the first time in fourteen days. However, derivative metrics suggest skepticism, leaving market participants questioning whether ETH can maintain its momentum toward $5,000.

ETH 60-day futures premium compared to spot markets. ETH 60-day futures annualized premium relative to spot markets. Source: laevitas.ch

Ether futures are currently trading at a 7% premium relative to spot markets, comfortably within a neutral range of 5% to 10%. However, this indicator has yet to display bullish trends since February. Even the significant ETH rally prior to August 13 failed to instill confidence among traders.

Rise in DEX Competition Diminishes Ether’s Appeal

Concerns among Ether traders have escalated due to the emergence of competitors like Solana following the successful launch of the Official Trump memecoin, which facilitates smoother onboarding for new users and directly connects wallets to decentralized exchanges.

Despite Ethereum’s dominance in total value locked (TVL), overall network activity appears stagnant; a trend likely responsible for muted Ether derivative indicators. Compounding this issue, fees for several Ethereum competitors have reportedly doubled over the last month, reducing ETH’s market attractiveness.

Blockchain fees over 30 days. Rankings of blockchains by 30-day network fees, USD. Source: Nansen

Ethereum’s network fees fell by 30% this past month, along with a 10% reduction in transactions. Conversely, fees for blockchain partners such as BNB Chain and HyperEVM surged, complemented by transaction volume rising by more than 60%. While deposits into Ethereum smart contracts increased by 5% in the same timeframe, the growing competition poses a challenge for Ether to retain its prominent market position.

Top protocols ranked by TVL in USD. Top Ethereum protocols ranked by TVL. Source: DefiLlama

Noteworthy upticks in Ethereum’s TVL growth include the synthetic stablecoin protocol Ethena, which rallied by 18%, while the Spark platform observed a robust 28% increase in deposits. Conversely, the Pendle yield platform suffered a significant 50% drop in TVL, while Morpho’s lending platform saw an 8% dip.

The Ether options delta skew remains stable within a neutral range of +6% to -6%, indicating equilibrium between put and call options.

ETH traders may feel apprehensive about the upcoming approval of altcoin spot exchange-traded funds (ETFs) by the SEC. Analysts believe Solana, Litecoin, and XRP might receive approval in October, which could enhance their networks and increase competition in the altcoin space.

The future growth of Ether largely depends on continuous institutional investment via spot ETFs and corporate adoption of ETH as a reserve asset. Notably, Bitmine Immersion Tech (BMNR) has added nearly $12 billion in Ether, potentially triggering a supply shock that could elevate prices beyond the $5,000 mark.