Written by: Long Yue, Wall Street Insights
As the second-largest cryptocurrency by market value, Ethereum (Ether) performed better than other major digital assets over the past weekend.
On Monday during the Asian trading session, its price rose 2.9%, breaking through $4,300 and reaching its highest level since December 2021. Over the past 7 days, Ethereum has accumulated a rise of over 20%. Meanwhile, Bitcoin's price also broke through $121,000 today, approaching its historical high.
Behind this rally is the growing interest from large investors. Data shows that since the beginning of the year, nine Ethereum spot ETFs listed in the United States have attracted over $6.7 billion in net capital inflows. Additionally, so-called "digital asset financial companies" - those that have shifted their business focus to accumulating cryptocurrencies - have also provided momentum for Ethereum's rise. According to data compiled by strategicethreserve.xyz, these companies have so far stored Ethereum worth approximately $13 billion.
Sean McNulty, Head of Derivatives Trading for Asia Pacific at digital asset brokerage FalconX Ltd, stated that capital flowing from Bitcoin to Ethereum represents a massive positive sentiment shift "driven by strong spot ETF inflows, growing corporate financial adoption, and broader stablecoin tailwinds".
The options market also reflects bullish sentiment, with Ethereum's overall put-to-call ratio at 0.39. According to Deribit data, call options expiring on December 26 are most concentrated at the $6,000 strike price.
Interestingly, Eric Trump, son of former US President Trump, cheered Ethereum's rally on the X platform. According to a Bloomberg report last Friday, large investors are discussing the World Liberty Financial plan, a Trump family-supported enterprise proposing to establish a listed company holding its WLFI token.
ETF Capital Flow Reversal
Changes in capital flow directly reflect market sentiment. A Wall Street Insights article noted that since May, Ethereum spot ETFs in the United States have continuously recorded net capital inflows, with their capital absorption capacity significantly surpassing Bitcoin's in recent times. Data shows that during six consecutive trading days in late July, Ethereum ETF's net inflows totaled nearly $2.4 billion, far higher than Bitcoin ETF's $827 million during the same period.
This trend is also reflected in price performance and derivatives markets. In recent weeks, Ethereum has continuously outperformed Bitcoin, with their price ratio strongly rebounding from its lowest point since 2019. Meanwhile, the annualized premium for Ethereum futures on the Chicago Mercantile Exchange (CME) has exceeded 10%, higher than Bitcoin's level, prompting some traders to shift positions from Bitcoin to Ethereum.
From Bitcoin to Ethereum: A Shift in Market Dominance?
Following multiple enterprises using Bitcoin as a financial reserve asset, a similar trend is now repeating with Ethereum. Goldman Sachs' crypto team noted that, similar to more companies incorporating Bitcoin into financial reserves, some US listed companies have recently begun establishing Ethereum reserves. Estimates suggest these companies have purchased over $1.5 billion in ETH over the past month.
Meanwhile, Ethereum has far outperformed Bitcoin in recent weeks, with their price ratio strongly rebounding from its previous low since 2019. The annualized premium for Ethereum CME futures relative to spot has exceeded 10%, surpassing Bitcoin's level and prompting some positions to shift from Bitcoin to Ethereum.
Swiss blockchain research institution Swissblock predicts this trend will continue, believing that "as the market enters a new cycle, ETH is replacing BTC as the market leader".
