Key takeaways:
Ethereum network activity increased by 63% over the last month, bolstering the likelihood of a breakout to $5,000.
Ether futures open interest rose to $69 billion, indicating strong demand for leveraged positions.
Ether (ETH) reached its highest price in nearly four years on Friday, resulting in $351 million in liquidations from short positions. This increase followed expectations of a less restrictive monetary policy in the U.S., influenced by comments from Federal Reserve Chair Jerome Powell. Will this upward momentum enable ETH to surpass the $5,000 threshold?
Nasdaq rally indicates renewed interest in ETH and risk assets
The tech-dominated Nasdaq Index rose by 1.8%, reflecting a shift in investor sentiment away from risk aversion towards reallocating from fixed-income assets. Ether has experienced a 33% increase in the past month, with three indicators suggesting additional strength that could reinforce the ongoing bull trend. With ETH priced above $4,800, a move to new all-time highs may be imminent.
Powell’s statements at the Jackson Hole Economic Symposium heightened expectations for potential rate cuts: “The baseline outlook and shifting risk balance may require adjustments to our policy stance.” The CME FedWatch tool indicates a 45% probability of rates falling to 3.5% or lower by March 2026, an increase from 37% the previous week. Lower borrowing costs can reduce financial pressures on businesses, thereby minimizing systemic risks.
Ether is also gaining support from increasing onchain transactions. Activity on the Ethereum network rose by 63% in the last month, with active addresses climbing 26%. In contrast, Solana only saw a 2% increase in transactions, with active addresses decreasing by 14%, as per Nansen data. Meanwhile, BNB Chain experienced a significant 50% decline in transaction numbers.
While onchain metrics indicate increasing activity, futures markets display a more cautious attitude. ETH futures contracts typically trade at a premium of 5% to 10% over spot prices to account for settlement delays. Currently, the monthly futures premium is at 7%, a rise from a bearish 4% earlier this week.
Some skepticism arises from comparisons with competitors. Both BNB (BNB) and Tron (TRX) are trading significantly above their all-time highs from November 2021, while ETH is still struggling beneath its $4,868 peak. This discrepancy contributes to trader hesitancy despite strong network fundamentals.
Related: BlackRock spearheads $287M in spot Ether ETF inflows after a 4-day outflow period
Positive ETH futures metrics bolster the rally
User JA_Maartun on X notes that futures buyers have not demonstrated this level of eagerness in over a month. Analytics firm CryptoQuant monitors these trends by measuring the volume of filled buy orders against pending sell offers, indicating rising conviction.
Despite the recent liquidations of short positions, total open interest in Ether futures remains strong at 14.4 million ETH, consistent with the previous week. In dollar terms, leveraged ETH positions amount to an impressive $69 billion, underscoring sustained demand for exposure.
This combination of high futures premiums, stable open interest, and increasing onchain activity reinforces the likelihood of a breakout, suggesting that the $5,000 milestone may arrive sooner than many traders anticipate.
This article is for informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
