Ethereum
Ethereum Fund Premium Rises: Will This Trigger an ATH for ETH Again?
- The ETH funds market premium has reached its highest level since November 2021.
- The coin’s value could experience a brief decline once buyer exhaustion sets in.
Ethereum [ETH] The fund market premium has reached its highest level in three years, according to CryptoQuant data.
Although the indicator has maintained an upward trend since early May, most of the rise occurred after the U.S. Securities and Exchange Commission (SEC) approved all eight exchange-traded fund applications (ETF) spot ETH on May 23.
ETH Fund Market Premium measures the difference between the price of the coin on spot markets and the price of an Ethereum-based fund or trust.
When this metric increases, it indicates a growing demand for ETH in investment funds.
This means that investors are willing to pay a premium for exposure to Ethereum through investment funds rather than buying it at spot market prices.
At press time, the ETH funds market premium was -0.81.
According to data from CryptoQuant, it last reached this high on November 10, 2021. A few days later, on November 16, the altcoin reached an all-time high of $4,891.
Source: CryptoQuant
Coinbase pays the price
The decline in the Coinbase Premium Index (CPI) also illustrates US investors’ preference for exposure to ETH via investment funds.
The coin’s CPI, which tracks the difference between its prices on Coinbase and Binance, fell back into negative territory, suggesting less trading activity on the US-based exchange.
At the time of writing, ETH’s CPI was -0.08.
Source: CryptoQuant
Confirming this trend, the Coinbase Premium Gap (CPG) value of ETH was also negative at press time.
A negative CPG indicates that the altcoin is trading at a lower price on Coinbase compared to other major exchanges.
Source: CryptoQuant
This could be due to a number of reasons, ranging from market imbalances to liquidity issues. But in this case, it is due to a shift in focus towards ETH-based investment products.
ETH will witness a slight pullback
According to CoinMarketCap data, ETH was trading at $3,859 at press time.
As its key rising momentum indicators show, ETH accumulation has increased significantly in recent days.
Is your wallet green? Check ETH Profit Calculator
At press time, ETH’s relative strength index (RSI) was 70.17, while its money flow index (MFI) was 74.41.
Source: ETH/USDT on TradingView
It is essential to note that at these values, buyer exhaustion could set in due to an overheating of the market. Therefore, a potential minor price correction could be on the horizon.