Ethereum ($ETH) is back above $4,000 for the first time since December 2021, reigniting interest among investors and analysts.
The jump, recorded on Monday, 16 December, has many wondering if this could signal the start of a new bull market.
Ethereum’s rise to $4,081 has caught the attention of analysts, especially those studying long-term trends.
Blockchain analytics platform, Glassnode, reports that long-term holders (LTH) of Ethereum are showing renewed optimism.
The platform uses a metric called Long-Term Holder-Net Unrealised Profit/Loss (LTH-NUPL) to gauge market sentiment.
This metric categorises market phases into five groups: Capitulation (red), a bearish period where prices are stagnant; Hope (orange), the start of recovery from a bear market; Optimism (yellow), A clearer indication that the market is improving; Belief (green): The early stage of a bull market; Euphoria (blue): When prices approach a peak, often marking the top of a cycle.
Historically, Ethereum’s price movements align with these phases. The current data suggests that the cryptocurrency is transitioning between the hope and optimism stages.
This shift often signals a potential exit from bearish conditions and a move towards sustained growth.
According to analysts, the hope-to-optimism phase is crucial. It indicates that investor sentiment is improving, a necessary step for building momentum towards higher prices.
What’s driving the surge?
Ethereum’s latest price increase comes as Bitcoin ($BTC) reaches record-breaking highs. On the same day, Bitcoin hit $107,822, surpassing its previous all-time high of $106,352, which was set just the day before.
The cryptocurrency market as a whole has been on an upswing, with both $BTC and $ETH showing strong performance.
However, this rally hasn’t been good news for everyone. Short sellers, or traders who bet against prices rising, have faced significant losses.
Data from CoinGlass shows that Bitcoin short positions worth $133 million were liquidated in the past 24 hours.
Ethereum short liquidations reached nearly $68 million during the same period. In total, cryptocurrency liquidations amounted to $489 million, reflecting the volatility of the market.
Despite its gains, Ethereum still trails its all-time high of $4,878, which it reached in November 2021.
However, the 3% daily gain recorded on Monday signals that investors are regaining confidence in the cryptocurrency.
Bitcoin, meanwhile, continues to dominate, with its price increasing nearly 8.5% over the past week.
Ethereum’s market share and future outlook
While Ethereum’s price recovery is encouraging, its share of the cryptocurrency market has been shrinking.
Analysts at Matrixport point out that Ethereum’s market dominance has dropped from 18% to 12%, partly due to the launch of Ethereum spot ETFs.
Meanwhile, Bitcoin has strengthened its position, with its dominance peaking at 61% before settling at 54%.
Despite this decline, Ethereum’s future prospects remain promising. Matrixport believes that institutional investors could play a key role in the cryptocurrency’s comeback.
Large financial institutions have shown increasing interest in Ethereum, and more inflows into Ethereum-focused ETFs could provide the boost it needs.
“Ethereum has fallen behind Bitcoin in 2024, but we see signs of a strong recovery by 2025”, said a Matrixport analyst. “Institutional demand and growing adoption could help Ethereum regain its footing”.
Some analysts also note that Ethereum’s long-term value could benefit from its role in decentralised finance (DeFi) and smart contracts.
As altcoins like Solana gain popularity, Ethereum’s established network and growing institutional backing may help it maintain relevance in a competitive market.
Ethereum’s rise above $4,000 has brought renewed hope to its investors. While it remains below its historic highs, improving market sentiment and increasing interest from financial institutions suggest brighter days ahead.
If current trends hold, Ethereum could regain its strength and challenge Bitcoin’s dominance in the near future.
