NOIDA (CoinChapter.com) — Hopes of spot Exchange Traded Funds (ETF) launching in May helped Ethereum’s (ETH) price rally to its highest levels since May 2022.
Bitcoin’s (BTC) price rallied to $52,000 recently after institutional interest in the token spiked following the approval of spot Bitcoin ETFs earlier this year. Now, investors are hoping that the ETH price would enjoy a similar rally as the spot ETH ETFs will boost the token’s institutional appeal.
Institutional Buy-In for Spot ETH ETFs
As of Feb. 15, Franklin Templeton, BlackRock, Fidelity, Grayscale, VanEck, Invesco, Hashdex, etc. were some of the applicants for spot Ether ETF. Most of these firms already offer a Bitcoin ETF.
Since launch, spot BTC ETFs have purchased over $11 billion in Bitcoin, driving demand for the token. Investors hope that the launch of spot ETH ETFs could have a similar impact on Ether prices, prompting an increase in buying pressure.
Moreover, ETH ETFs might also offer yearly rewards of up to 5%, since the firms launching the ETFs can stake the tokens in the funds. This could be another potentially bullish driver for ETH prices.
Open Interest Spikes For ETH
Meanwhile, the funding rate for ETH remains positive, indicating investors are going for long positions rather than shorting the token. Funding rates refer to the periodic payments that futures contract holders receive. It is equal to the difference between perpetual contracts and spot prices.
Historically, a positive funding rate often suggests a bullish mindset among investors.
Furthermore, open interest for ETH futures is rising, which could suggest that traders are opening more long positions on the token. Of note, ETH price’s recent rally has resulted in $114.3 million in short liquidations since Feb. 10. On the flip side, traders liquidated only $70 million in long positions in the same timeframe.
ETH Price Targeting $3k On Back Of Spot ETF Hype
The hype over potential approval of spot Ethereum ETFs has helped the price of Ether set its sights on the $3,000 price tag. As a result, the token has been rallying since Feb. 6, spiking nearly 25% to reach a daily high of around $2,860 on Feb. 16.
However, the spot Ethereum ETF hype-driven bull run has also pushed the token’s RSI into the overbought region, with a reading of 79.13 on the daily charts.
Overbought RSI levels often precede a bearish reversal or consolidation phase for a token. As such, ETH price could drop to the 20-day EMA (red wave) with support near $2,600 if the rally breaks down. Morever, breaching the immediate support level might see Ether test the support around the $2,350 mark.
In conclusion, the spot Ethereum ETF fever could continue driving the ETF price upward. This would help the token rally to the resistance near $2,960. Breaking and consolidating above the immediate resistance could see ETH price target the resistance near $3,220 before retreating.
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