How Far Can the Surging Ethereum Go...All-Time High Approaching

Ethereum has surged more than 50% in a month. Although it has set an all-time high, its recent growth contrasts with the stagnant trend of Bitcoin. The sharp rise in Ethereum is notable given its price had long lagged behind Bitcoin's. This trend is attributed to the recent entry of stablecoins into the regulatory framework in the US and an increasing number of companies holding Ethereum as an asset.

All-Time High Approaching

According to domestic cryptocurrency exchange Upbit on the 16th, Ethereum has risen 57.2% over the past month, soaring past the ₩6,000,000 mark. This is the first time Ethereum has traded above this level domestically. Globally, Ethereum is trading at around $4,700, inching closer to its all-time high of $4,891.70 set in November 2021.

Ethereum is ranked second behind Bitcoin in market capitalization, but this surge has narrowed the gap. According to CoinMarketCap, Ethereum's market cap stands at $570.2 billion, about 25% of Bitcoin's $2.24 trillion—quite a difference from just four months ago, in April, when it was 11.7%. Ethereum's relative value compared to Bitcoin has also increased. In April, 1 Ethereum was worth just 0.018 Bitcoin, but this has recently risen to about 0.038 Bitcoin. Ethereum's growth rate is overwhelming even when compared to the overall market's 12.8% rise.

Ethereum's significant price surge is due to the inflow of funds from global institutional investors. Major asset management firms such as BlackRock, Fidelity, and Grayscale have launched Ethereum spot ETFs, fueling both institutional and individual demand. Since listing, Ethereum spot ETFs have recorded explosive trading volumes. Bloomberg reports that as of the end of last month, the cumulative trading value of Ethereum spot ETFs had reached $123.5 billion (about ₩165 trillion).

Closely Linked with Stablecoins

The recently passed GENIUS Act by the US Congress is also supporting Ethereum's strength. The core of the GENIUS Act is to bring stablecoins under the regulatory framework. Most major stablecoins are issued and traded on the Ethereum network. Tether (USDT), the world's leading stablecoin, sees 30% of its total circulation traded on Ethereum. For USD Coin (USDC), this percentage is 45%, and for Dai (DAI), it’s as high as 95%. With the enactment of the GENIUS Act clarifying the legality of Ethereum-based payments and transfers, interest in Ethereum is growing.

Ethereum's own technical competitiveness has also positively influenced investor sentiment. The Pectra upgrade, completed last May, significantly sped up the Ethereum network and reduced transaction fees. Previously, the Ethereum network suffered from slow processing and high fees, but this upgrade has greatly improved its performance. As technical convenience increases, expectations for the expansion of the Ethereum ecosystem—including DeFi (blockchain-based financial services) and NFTs—are also rising.

The number of publicly listed US companies holding Ethereum is increasing. This is the so-called 'Digital Asset Treasury (DAT)' strategy, in which coins are accumulated as corporate assets. Bitmain Immersion Technologies currently holds a total of 1,150,263 Ethereum, valued at approximately ₩7.361 trillion. Sharplink Gaming, a Nasdaq-listed company, also holds 598,800 Ethereum. Nasdaq-listed 180 Life Sciences announced its name change to Etherzilla and disclosed plans to convert part of its treasury assets to Ethereum.

Favorable Macro Environment

The easing of inflation in the US has fueled expectations for an imminent interest rate cut by the Federal Reserve (Fed), which has been a boon for the entire cryptocurrency market. A rate cut by the Fed typically weakens the dollar and reduces the appeal of safe assets such as deposits and bonds. Consequently, investors turn to risk assets such as stocks and cryptocurrencies in pursuit of higher returns. This macroeconomic environment change is being analyzed as a positive factor driving capital inflow into the cryptocurrency market.

Standard Chartered (SC) Bank has raised its year-end price target for Ethereum from $4,000 to $7,500 and predicts it could reach $25,000 by 2028. Geoff Kendrick, an SC analyst, cited the sharp increase in institutional demand, crypto-friendly regulations, and network upgrades as reasons for raising the price target, noting, "More than half of all stablecoins are issued on Ethereum, and it already accounts for 40% of all blockchain fees."

However, with prices rising sharply in a short period, a short-term correction is possible. Typically, after a rapid climb, there is often an increase in selling as investors lock in profits. Especially since the recent surge has been heavily reliant on event-driven factors such as spot ETF launches and regulatory tailwinds, experts warn that investor sentiment could cool rapidly.

Reporter: Jomihyun