- Ethereum has a four-in-five chance of hitting a new record high in 2024, according to bettors on Polymarket.
- At the same time, analysts and online punters’ hopes for an Ethereum ETF approval are dwindling.
- So what’s driving the surge?
Online punters put the odds of Ethereum breaking a record this year at 79%, according to a bet on crypto predictions platform Polymarket. That’s up from 31% in mid-February.
Yet bettors and analysts are putting slim chances of a Securities and Exchange Commission approval of a spot Ethereum exchange-traded fund.
The deadline for an SEC decision on VanEck’s application is on May 23.
Bettors on Polymarket give a spot Ethereum ETF a 31% chance of being approved, down from 82% at the beginning of January.
“I get all the reasons they should approve it — and we personally believe they should — but all the signs/sources that were making us bullish [two and a half months] out for Bitcoin spot are not there this time,” Eric Balchunas said in a post on X.
He and his fellow Bloomberg Intelligence analyst James Seyffart revised their approval odds to 35% on Monday, down from 70% in February.
The hope is that if and when spot Ethereum ETFs are approved, they will give the asset a similar growth as Bitcoin had on the back of ETFs in January.
The news comes as Bitcoin hit a new all-time high of $71,000 on Monday, with many wondering if Ethereum will follow suit.
Ethereum surged to a yearly high above $4,070 on Monday and is up more than 60% over the last 30 days.
Ethereum reached a record $4,878 in November 2021.
Analysts have identified several key factors that could super-charge it to new peaks.
They include broad optimism, supply-side dynamics, and the upcoming Dencun upgrade.
Supply constraints
Another Ethereum tailwind: its shrinking supply due to tokens being locked up for staking, Pratik Kala, senior digital asset investment analyst at crypto fund manager DigitalX, told DL News on Monday.
“Less supply to go around is always bullish,” Pratik said. “This also indicates strong long-term investor demand to buy/hold/stake ETH versus using it for short-term speculation.”
Staking in Ethereum parallels Bitcoin mining by generating additional tokens, verifying transactions, and safeguarding the blockchain.
Locking up tokens for staking effectively means removed them from the circulating supply, which can lead to a decrease in the overall available supply.
Roughly 26% of Ethereum’s estimated circulating supply of more than 120 million tokens are locked away, according to blockchain explorer beaconcha.in.
Dencun upgrade
Investment bank JPMorgan and spot Bitcoin ETF provider Grayscale are among those that have identified the Dencun upgrade as a catalyst for Ethereum.
The upgrade, due Wednesday UK time, is designed to enhance scalability and reduce transaction fees on layer 2 platforms.
“With layer 2 solutions built on top of Ethereum, the blockchain is becoming the settlement layer for a whole new digital infrastructure encompassing gaming, trading, and investing,” Eugene Cheung, Bybit’s head of institutions, told DL News earlier in March.
“The value of all of this will tend to accrue to the ETH asset.”
Correction: A previous headline misstated the Polymarket odds of an Ethereum record at 56%. It has been corrected to 79%.
Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.
