On September 28, Ethereum (ETH) swiftly surged by 3% to reach $1,650, following a suggestion by Bloomberg Analyst Eric Balchunas that the SEC might approve an Ethereum Futures ETF by Friday. The question now is: how will this development impact Ethereum’s spot market prices?
The anticipation of an impending Ethereum ETF approval has led to a substantial increase in capital flowing into ETH Derivatives markets. The question on everyone’s mind is, if these market forecasts come to fruition, how high can Ethereum prices soar?
Ethereum’s Open Interest Reaches a 40-Day High Following $450 Million Inflows.
On September 28, Ethereum experienced a 3% price surge following a Twitter hint from Bloomberg ETF analyst Eric Balchunas regarding the potential approval of a Futures ETF. Ethereum derivatives traders responded favorably to this news.
As illustrated below, the collective Open Interest for ETH was at $4.16 billion on September 27. Within a mere 24 hours following the news, this figure had surged to $4.51 billion.
This indicates that investors injected $450 million into the ETH Futures market, driven by the anticipation of a forthcoming approval of an ETH ETF by the US Securities and Exchange Commission (SEC) on Friday.
Open Interest represents the sum of all outstanding derivatives contracts for an asset across different Futures trading platforms. A rising trend in Open Interest serves as a bullish indicator, signaling an influx of new market participants and increased capital inflow.
If the SEC grants approval to the anticipated ETH Futures ETF, Ethereum’s Open Interest could experience further expansion in the upcoming weeks. Nonetheless, for this to result in a corresponding price surge for ETH, it must translate into heightened demand in the spot market.
Bullish Sentiment Is Spreading to the Spot Markets
Undoubtedly, the recent news has bolstered confidence in the Ethereum derivatives markets. Nevertheless, on-chain data collected from 21 cryptocurrency exchanges reveals that investors have been accumulating orders in the spot markets as well.
As depicted below, bullish investors have initiated active buy orders for 500,000 ETH. This figure significantly surpasses the 433,670 ETH currently available for sale, marking a notable demand surge.
The On-chain Market Depth chart for exchanges displays the quantity of active ETH spot orders on well-established cryptocurrency exchanges.
As illustrated above, Ethereum’s market demand has surpassed the available supply by a margin of over 66,330 ETH. This indicates that the rumors surrounding the Futures ETF approval have also heightened confidence among retail market participants.
In summary, if Eric Balchunas’ speculation regarding ETH approval proves accurate, Ethereum’s price could experience significant gains.
Ethereum (ETH) Price Forecast: Possibility of an Upward Surge to $2,500
Based on the comprehensive analysis of the key data points mentioned above, there is a potential for ETH to reattain the $2,500 mark if the expected spot market response is triggered by the ETF approval.
Further supporting this bullish outlook is the Global In/Out of Money Around Price (GIOM) data, which presents the entry price distribution of existing ETH holders.
This data indicates that should ETH successfully surpass the $1,850 resistance level, the bullish momentum could propel it towards $2,500. As indicated below, there are 6.88 million addresses that acquired 8.38 million ETH tokens at an average price of $1,850. Should these holders decide to take profits early, it could create a substantial selling barrier.
Nevertheless, if speculative activity in the derivatives market intensifies, it may drive the Ethereum price rally closer to the $2,500 threshold.
On the flip side, the optimistic projection may be negated should Ethereum’s price dip below $1,500. Nevertheless, as demonstrated earlier, there are 3.28 million addresses that acquired 6.69 million ETH at the lowest price point of $1,587.
If the prevailing bullish sentiment continues, these holders are likely to act as a deterrent against a bearish downturn. However, in the event that the ETH price is unable to maintain this support level, it could potentially pave the way for a reversal below $1,500.