The hype of the spot Ethereum ETF is pushing ETH to recent highs and risks a reversal…
NOIDA (CoinChapter.com) — Hopes for a cash exchange-traded fund (ETF) launch in May helped lift the price of Ethereum (ETH) to its highest level since May 2022.
Bitcoin (BTC) price recently rebounded to $52,000 after a surge in institutional interest in the token following the approval of a spot Bitcoin ETF earlier this year. Now, investors are hoping that the price of ETH can enjoy a similar uptick as a spot ETH ETF will increase the institutional appeal of the token.
Institutional Buy-in for Spot ETH ETF
As of February 15, Franklin Templeton, BlackRock, Fidelity, Grayscale, VanEck, Invesco, and Hashdex have applied for a spot Ether ETF. Most of these companies already offer Bitcoin ETFs.
The spot BTC ETF has purchased more than $11 billion in Bitcoin since launch, driving demand for the token. Investors are hoping that the launch of a spot ETH ETF could have a similar impact on the price of Ether, increasing buying pressure.
Additionally, the ETH ETF may offer annual rewards of up to 5% as the company launching the ETF can stake its tokens on the fund. This could be another potential bullish driver for the ETH price.
ETH open interest surges
Meanwhile, ETH’s funding ratio remains positive, indicating that investors are taking a long position rather than selling the token. The funding rate represents the payment that futures contract holders receive on a regular basis. It’s like the difference between a perpetual contract and the spot price.
Historically, positive funding rates often signal an optimistic mindset among investors.
Additionally, open interest on ETH futures is increasing, which could suggest that traders are opening more long positions in the token. Of note, the recent rebound in ETH price has resulted in $114.3 million in short liquidation since February 10th. Meanwhile, traders liquidated only $70 million in long positions during the same period.
ETH Price Targets $3,000 Amid Spot ETF Hype
Hype over the possible approval of a spot Ethereum ETF has helped the Ethereum price target the $3,000 price tag. As a result, the token rebounded from February 6th, soaring nearly 25% to reach its daily high of around $2,860 on February 16th.
However, the bull market driven by the Ethereum ETF hype has pushed the token’s RSI into overbought territory, hitting 79.13 on the daily chart.
Overbought RSI levels often precede a bearish reversal or consolidation phase in a token. Therefore, ETH price could fall towards the 20-day EMA (red wave) with support around $2,600 if the rally breaks down. Moreover, a violation of the immediate support level could see Ether testing support around $2,350.
In conclusion, the spot Ethereum ETF craze may continue to drive ETF prices higher. This will help the token rally towards resistance near $2,960. A break above the immediate resistance and consolidation could see ETH price targeting resistance near $3,220 before pulling back.