Ethereum's price has been steadily rising over the past week, increasing by almost 10%. This is because institutional investors continue to inject capital into major altcoins.
This upward trend is emerging amid the overall optimism in the cryptocurrency market and a strengthened correlation with Bitcoin, which is approaching a new all-time high. This trend suggests that Ethereum could break through a major barrier, but obstacles still remain.
Rising ETH/BTC Correlation
The correlation between Ethereum and Bitcoin has sharply increased since the end of June. The ETH/BTC correlation coefficient measures how closely ETH's price movements track BTC's movements during a given period, and is currently positioned at 0.02.
The closer the value is to 1, the more the two assets move in the same direction, and the closer to -1, the more they move in opposite directions.
As BTC approaches its all-time high, ETH's price can also rise. Historically, a high correlation in a bull market has signaled a joint rally for both assets.
Institutions Buying ETH... Target is $3,000
Institutional investors appear to be establishing positions in Ethereum, leveraging the rising ETH/BTC correlation. Since both assets have historically risen together in bull markets, this group anticipates a breakthrough above $3,000.
According to glassnode's on-chain data, ETH futures open interest at the Chicago Mercantile Exchange (CME) measured by a 7-day simple moving average has reached an all-time high of $3.34 billion.
This reflects that major market participants are accumulating ETH, expecting further increases.
Open interest represents the total number of outstanding futures contracts not yet settled. Such a surge indicates increased trading activity and capital inflow into the market.
Additionally, steady weekly inflows into spot ETH ETFs show growing confidence in altcoins among these key investors.
According to SosoValue, ETH-backed funds have recorded uninterrupted weekly inflows since May 9th. Last week alone, over $219 million in capital flowed into ETH spot ETFs, despite the coin's relatively sideways price movement.
This continuous investment confirms rising long-term confidence in ETH's value. It shows sophisticated investors are positioning themselves ahead of an anticipated breakthrough above $3,000.
However, there's a problem.
ETH Strength, But Retail Investors Exiting
While major holders pursue a rally above $3,000, ETH's short-term price movements continue to be constrained by "paper hands" - retail traders who hold the coin for less than 30 days and are selling during the recent strength.
According to IntoTheBlock's data, this group's balance has decreased by 16% since July 4th, slowing the coin's price increase despite strong institutional support.
Retail traders drive short-term price performance through frequent, emotion-based buying and selling. Unlike institutional investors who tend to withstand volatility, retail participants are more reactive to news, sentiment, and short-term price movements.
When they start selling, downward pressure can increase, potentially stopping the rally or triggering a correction.
Institutional interest in ETH is a good sign of long-term confidence, but retail traders are necessary to drive a short-term rally above $3,000. If they remain indifferent and demand decreases, the coin could lose some recent gains and fall below $2,745.
However, if new demand increases, ETH's price could exceed $2,851 and reach $3,067.
