Bulls came back to pump the Ethereum market as prospects of making further gains in the Bitcoin one slowed down. As a result, the world’s second-largest cryptocurrency achieved a new milestone high entering the new weekly session.

The ETH/USD exchange rate crossed above $3,000 on Monday, hitting an intraday, weekly, monthly, quarterly, yearly, and an all-time high of $3,203. Its push upward brought its year-to-date gains up by more than 300 percent. That had Ethereum outpace its top rival Bitcoin, which rose by more than 95 percent in the same timeframe.

Lex Movkovski, chief investment officer at Moskovski Capital, credited organic spot buying behind Ethereum’s latest upside move. He cited a Glassnode chart that showed the funding rate for ETH/USD perpetual contracts across all exchanges neutral during the price rally.

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It means derivatives traders did not play any concrete role in driving the ETH/USD spot rates upward — and that the rally majorly came from genuine demand among spot traders.

“Nice organic spot-driven ETH run,” noted Mr. Movkovski. “Funding is almost flat. Looks sustainable.”

Ethereum Futures Perpetual Funding Rate. Source: Glassnode
Ethereum Futures Perpetual Funding Rate. Source: Glassnode

In retrospect, Funding Rates refer to periodic payments (generally, 8 hours) that traders with long positions pay to the traders with short positions. It is the difference between the perpetual contract price and the spot rate. Therefore, a positive funding rate implies that the market is majority bullish on the underlying asset. Conversely, a negative one indicates a majority bearish sentiment.

On the other than, a neutral one shows a leverage wipeout in the derivative market. In Ethereum’s case, the price rally has come from organic spot buying. It makes the bull case very strong, further supported by massive stable-coin flows seen on-chain.

Fundamentals that have catalyzed the Ethereum market to a new high include the ongoing boom in the decentralized finance and non-fungible token (NFT) sector. Meanwhile, the launch of Ethereum-focused exchange-traded funds has also accelerated the token’s overall bullish bias.

Ethereum confirms Symmetrical Triangle breakout pattern. Source: ETHUSD on TradingView.com
Ethereum confirms a Symmetrical Triangle breakout pattern. Source: ETHUSD on TradingView.com

Anticipations of the Ethereum supply crisis also provide tailwinds to the ongoing ETH/USD price boom. The smart contract that intends to lock ETH as collateral to support its upcoming blockchain upgrade — which would switch its core protocol from proof-of-work to proof-of-stake — has raised expectations of a lower Ethereum supply rate against rising demand.

Michael van de Poppe, an independent cryptocurrency analyst, expects ETH/USD to reach $5,000 shortly. Many pseudonymous analysts also think on the same bullish line, citing Ethereum’s growth as a blockchain project that would propel the demand for ETH tokens.

Image by Peter Patel from Pixabay