Key Points
Ethereum (ETH) is experiencing an upward price movement, with a 0.27% increase over the past 24 hours, bringing its trading value to $3,257.
The price of Ethereum has seen an 11% rise over the last week, reflecting the 16.3% increase in the price of Bitcoin (BTC) during the same timeframe.
This positive momentum of Ethereum is largely due to Bitcoin’s price hitting a more than two-year high of $57,000 and the impending Dencun upgrade.
Bitcoin’s Rise and Its Impact on Ethereum
On Feb. 27, Bitcoin crossed the $57,000 threshold for the first time since Nov. 2021.
Given the historical price correlation between the world’s two largest cryptocurrencies, Bitcoin’s price action has also boosted investor confidence in Ethereum.
Following the Ethereum rally, the Crypto Fear and Greed index reached a two-week high of 79, indicating extreme greed among investors.
In comparison, the index averaged 54 last month, signifying neutrality.
The Crypto Fear & Greed index serves as a comprehensive measure of crypto market sentiment.
Further boosting investor confidence, the spot Bitcoin exchange-traded funds in the United States set a new record with daily trading volume hitting $2.4 billion on Feb. 26, as reported by Eric Balchunas, a senior ETF analyst at Bloomberg.
Bitcoin’s ongoing pre-halving rally is significantly influencing the funds flowing into Ethereum, which are likely to rotate into smaller altcoins in the coming weeks, as per a Feb. 27 post by pseudonymous crypto analyst Rekt Capital.
On Feb. 26, the open interest in Ethereum futures on Binance, the world’s largest cryptocurrency exchange, reached a new all-time high of $3.88 billion, according to Coinglass.
The previous record of $3.31 billion in Ethereum open interest on Binance was surpassed on Nov. 3, 2021, when Ethereum was trading above $4,400.
Anticipation of the Dencun Upgrade
Apart from Bitcoin’s rally, Ethereum’s price movement is also linked to the anticipation surrounding the Dencun upgrade, which is scheduled for March 13.
This upgrade aims to reduce transaction costs and improve the scalability of the Ethereum network by introducing proto-danksharding, a mechanism that temporarily makes transaction data available in a more cost-efficient “compressed” format.
The Dencun upgrade is the main catalyst for Ethereum’s positive price action, as stated in a Feb. 23 report by Grayscale Research.
The report asserts that with the planned Dencun upgrade in March, Ethereum is on the verge of a significant transformation aimed at addressing its scalability issues.
It further suggests that the recent price performance reflects the market’s anticipation of this upgrade, as Ethereum has outperformed the broader Smart Contract Platforms Sector since January 1st, 2024.
