Ethereum fund premium rises: Will it trigger an ATH for ETH again?

Ethereum fund premium rises: Will it trigger an ATH for ETH again?
  • ETH’s Fund Market Premium has reached its highest level since November 2021.
  • The coin’s value may witness a brief pullback once buyers’ exhaustion sets in.

Ethereum’s [ETH] Fund Market Premium has rallied to a three-year high, according to CryptoQuant’s data.

Although the metric has maintained an uptrend since the beginning of May, most of the rally came after the U.S. Securities and Exchange Commission (SEC) approved the eight applications for spot ETH exchange-traded funds (ETFs) on 23rd May.

ETH’s Fund Market Premium measures the difference between the coin’s price in spot markets and the price of an Ethereum-based fund or trust.

When this metric surges, it indicates a rising demand for ETH in investment funds. 

It means that investors are willing to pay a premium to gain exposure to Ethereum through investment funds rather than buying it at market prices on the spot market. 

At press time, ETH’s Fund Market Premium was -0.81. 

According to CryptoQuant data, it last reached this high on 10th November 2021. A few days later, on 16th November, the altcoin clinched an all-time high of $4,891.

Ethereum fund premium rises: Will it trigger an ATH for ETH again?

Source: CryptoQuant

Coinbase bears the brunt

The declining Coinbase Premium Index (CPI) also depicted American investors’ preference for gaining exposure to ETH through investment funds. 

The coin’s CPI, which tracks the difference between its prices on Coinbase and Binance, has dipped back into negative territory, suggesting less trading activity on the US-based exchange. 

As of this writing, ETH’s CPI was -0.08.

Ethereum Coinbase Premium Index

Source: CryptoQuant

Confirming this trend, the value of ETH’s Coinbase Premium Gap (CPG) was also negative at press time. 

A negative CPG indicates that the altcoin is trading at a lower price on Coinbase compared to other major exchanges. 

Source: CryptoQuant

This may be due to a number of reasons, ranging from market imbalances to liquidity issues. But in this case, it is due to a shift in attention toward ETH-based investment products. 

ETH to witness a slight pullback

According to CoinMarketCap’s data, ETH exchanged hands at $3,859 at press time. 

As depicted by its rising key momentum indicators, ETH accumulation has significantly surged in the past few days.

Is your portfolio green? Check out the ETH Profit Calculator

At press time, ETH’s Relative Strength Index (RSI) was 70.17, while its Money Flow Index (MFI) was 74.41. 

ETH 1-Day Chart

Source: ETH/USDT on TradingView

It is key to note that at these values, buyers’ exhaustion might set in as the market becomes overheated. Hence, a potential minor price correction might be on the horizon. 

Source Reference

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