In a stunning display of bullish momentum, Ethereum’s native token, Ether (ETH), has surged past the $3,000 mark, reaching its highest level since August 2nd. The impressive rally comes in the wake of pro-crypto Donald Trump’s election victory and the Federal Reserve’s decision to cut interest rates earlier this week.
Ether Outshines Bitcoin Amid Favorable Developments
ETH, the world’s second-largest cryptocurrency by market capitalization, has rallied by a whopping 23.39% this week, marking its biggest gain since May. This stellar performance has far outpaced Bitcoin’s 11.2% increase over the same period. The total crypto market cap has also risen by 13.5% to $2.5 trillion.
The Ether rally can be attributed to two key factors. First, there is growing optimism that the Trump administration will ease regulatory barriers for the digital asset sector, potentially fostering the growth of decentralized finance (DeFi), a domain largely dominated by Ethereum.
Fed Rate Cuts Boost Ether’s Appeal
The second equally important factor is the Federal Reserve’s rate cut cycle, which is restoring ether’s attractiveness as an Internet bond, offering fixed-income yields through staking rewards. On Thursday, the Fed reduced its benchmark borrowing cost by 25 basis points to a range of 4.5%-4.75%, following an outsized 50 basis point cut in September. This rate reduction has narrowed the Fed-ether yield spread in favor of ETH.
Bullish Indicators Point to Continued Rally
The way ether options listed on Deribit are currently priced suggests that the ETH rally should continue. The call-put skew is positive across all time frames, indicating a relative richness in call options that offer asymmetric upside potential to the buyer.
Inflows into spot ether exchange-traded funds (ETFs) have also increased. On Friday, BlackRock’s iShares Ethereum Trust (ETHA) ETF recorded an inflow of nearly $60 million, the highest in three months, according to Farside Investors.
Ether Still Below 2021 Peak
Despite the impressive gains, ETH is still trading well below its 2021 peak of $4,868, while BTC trades at record highs above $75,000. This suggests that there may still be significant upside potential for Ether in the coming months.
As the crypto market continues to evolve and mature, Ethereum’s growing dominance in the DeFi space, coupled with a more favorable regulatory environment and accommodative monetary policy, could further fuel ETH’s ascent. Investors and traders will be closely monitoring the crypto markets to see if Ether can sustain its bullish momentum and potentially challenge new all-time highs in the near future.
