Ethereum fund premium rises: Will it trigger an ATH for ETH again?
Will Ethereum Fund Surge Spark New ATH?
Ethereum's Fund Market Premium has soared to its highest level since November 2021, indicating increased demand for ETH in investment funds. This surge followed the SEC's approval of eight spot ETH ETF applications on May 23. However, with the Relative Strength Index (RSI) and Money Flow Index (MFI) suggesting potential buyers' exhaustion, a slight price correction for ETH might be imminent. Additionally, the declining Coinbase Premium Index reflects a shift in American investors' preference towards ETH-based investment products over direct purchases on the spot market.
What is the significance of Ethereum's Fund Market Premium reaching its highest level since November 2021?
The significance of Ethereum's Fund Market Premium reaching its highest level since November 2021 lies in what it indicates about the demand for ETH and its potential impact on the cryptocurrency's value1.
The Fund Market Premium is a metric that measures the difference between the price of Ethereum in the spot market and the price of an Ethereum-based fund or trust15. A surge in this metric suggests a rising demand for ETH in investment funds. It implies that investors are willing to pay a premium to gain exposure to Ethereum through investment funds instead of buying it at market prices in the spot market.
According to CryptoQuant's data, Ethereum's Fund Market Premium reached -0.81, a level last seen on 10th November 2021. Just a few days after this peak, on 16th November, Ethereum clinched an all-time high of $4,891. This historical trend might suggest a potential correlation between a high Fund Market Premium and a subsequent surge in Ethereum's value1.
However, it's important to note that while the Fund Market Premium is high, buyers' exhaustion might set in as the market becomes overheated1. This could lead to a brief pullback in the coin's value. Therefore, while the high Fund Market Premium is a positive sign for Ethereum's demand, it also highlights the potential for a temporary price correction.
What were the trading price and key momentum indicators for Ethereum at the time of the report?
At the time of the report, Ethereum (ETH) was trading at $3,859. The key momentum indicators for ETH were as follows:
- Relative Strength Index (RSI): 70.17
- Money Flow Index (MFI): 74.41
These values suggest that buyers' exhaustion might set in as the market becomes overheated, indicating a potential minor price correction might be on the horizon.