Ethereum (ETH) has been trading around $4,665, up 9.42% over the week, although it has seen a 1.20% decline in the past 24 hours. The increase in price is attributed to growing institutional demand and significant inflows into ETFs.
Comparison of Current Cycle with Past Rallies
Market participants pointed to structural differences between this cycle and earlier phases. Trader @MerlijnTrader stated that investors once dismissed Ethereum at $1,500, doubted it at $2,200, and ignored it at $4,000. He argued that the current market reflects broader participation from Wall Street and ETFs, creating different dynamics compared to earlier cycles.
Market Direction Influenced by ETFs
Institutional inflows became a central driver of Ethereum’s recovery. The US Securities and Exchange Commission approved spot Ethereum ETFs in July 2024. Since then, ETFs have drawn more than $11 billion in net inflows, with August marking the strongest period at $2.87 billion added in a single week. The majority of these flows originated in the United States, with BlackRock’s iShares product capturing the largest share, effectively reducing circulating supply. Analysts argued that ETF accumulation created conditions for a supply squeeze.
Macro Conditions Support Risk Assets
Broader economic trends also favored Ethereum. The Federal Reserve is expected to reduce interest rates twice in 2025, starting as early as next week. Lower rates historically increased demand for higher-yielding assets, including tokens. Additionally, Ethereum’s supply has followed a deflationary pattern, with more ETH burned through transaction fees than issued through block rewards. This dynamic further supports the case for institutional holding of ETH.
Investor outlook remains constructive as multiple factors align. Analysts noted that ETF accumulation, favorable macro policies, and Ethereum’s supply mechanics position ETH for continued strength, making a $10,000 target within twelve months increasingly feasible.
