Why Ethereum Price Is Rising
NOIDA (CoinChapter.com) - Ethereum (ETH) has seen a significant price increase due to a combination of technical and fundamental factors. The reasons for the rise in Ethereum prices today include positive funding rates, increased open interest, and the Securities and Exchange Commission's approval of a spot ETH ETF.

Since May 20, ETH prices have risen by nearly 30%, reaching a daily high of $3,945 on May 27, highlighting the strong momentum driving the token’s price.

Funding Rate and Open Interest
One of the main reasons for Ethereum’s gains today is the favorable funding rate and rising open interest. The funding rate, a mechanism used to keep the price of perpetual futures contracts aligned with the price of the underlying asset, has remained positive.

This indicates that bullish positions (positions that bet on price increases) are paying out for bearish positions. The persistently positive funding rate suggests strong bullish sentiment among leveraged traders, reflecting their willingness to pay a premium to maintain bullish positions.

Open interest, a measure of the total number of unsettled derivative contracts, is also trending higher. Rising open interest means more money is entering the market, reinforcing the bullish outlook.

Furthermore, the surge in open interest coincides with the rise in ETH prices, indicating growing confidence and participation in Ethereum’s upward momentum.

The correlation between rising open interest and rising prices typically means strong investor interest and growing market confidence, which further explains why Ethereum is rising today.

The SEC’s approval of the ETH ETF may be another important factor in Ethereum’s rise today
Another important factor that has contributed to the surge in Ethereum prices is the recent approval by the CSRC of several Ethereum-based exchange-traded products (ETPs). On May 23, 2024, the CSRC accelerated the approval of Ethereum-based ETF stocks to be listed and traded on major exchanges such as the New York Stock Exchange, Nasdaq, and Cboe BZX.

Approved products include the Grayscale Ethereum Trust, Bitwise Ethereum ETF, iShares Ethereum Trust, VanEck Ethereum Trust, ARK 21Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, Fidelity Ethereum Fund, and Franklin Ethereum ETF.

Traders believe that ETF approval could be a major bullish signal for ETH.

Furthermore, this milestone approval is important for several key reasons. First, it provides institutional and retail investors with a regulated and secure investment path, which could increase mainstream adoption of Ethereum.

With these ETFs, investors can gain exposure to Ethereum without having to buy the cryptocurrency directly, which mitigates some of the risks associated with holding and protecting digital assets. In addition, the approval also provides an endorsement of the legitimacy and stability of Ethereum as an investment asset.

By meeting the SEC’s strict regulatory requirements, the spot ETH ETF provides investors with a sense of certainty about introducing Ethereum into their portfolios. The excitement brought about by the regulatory approval may be one of the reasons why Ethereum rose today.

If the price of ETH rises like Bitcoin did after the approval and launch of the Spot Bitcoin ETF, it could reach $7,174.

ETH price forms bullish pattern
Meanwhile, ETH price formed a technical setup called a “bullish flag pattern.”

This pattern is formed when the price of a crypto token experiences a near vertical rise and forms a flagpole. This pattern is usually seen in assets that are in a strong uptrend.

After a steep rise, the asset undergoes a sustained period of consolidation, forming the flag of the pattern. Despite the initial strong rally, the price remains stable as buying pressure persists. Usually, a breakout from this consolidation phase triggers another major up move.

The pattern reaches completion when the price breaks out of the flag area and resumes its previous upward trajectory. Traders predict the price target of the breakout by adding the length of the flag pole to the breakout price level.

According to the rules of technical analysis, if the coin confirms a bullish technical pattern, the ETH price could rise by more than 90% to reach the pattern’s theoretical price target of around $7,420. It seems that $7,000 is a bullish target for this major altcoin.