As Bitcoin maintains its recent highs, the status of Ethereum (ETH) is also rising. Although ETH is currently 36% lower than its historical peak of $4,878 in 2021, analysts expect that the second-largest cryptocurrency by market capitalization may be preparing for a significant shift.
The Ethereum ecosystem is very active, with a surge in institutional investment, rising ETF interest, and increasing trading volume.
According to the latest statistics from IntoTheBlock, Ethereum's daily trading volume has climbed from 1.1 million transactions recorded three months ago to 1.22 million transactions, marking a significant increase.
Although the increase is modest, it indicates that network usage is consistent. This sustained activity lays the groundwork for Ethereum's long-term value and highlights its ongoing significance in the crypto space.
Institutional investors are betting
In the past week, institutional buyers purchased over $1.4 billion worth of Ethereum (ETH), causing a stir in the crypto community. During the same period, $147 million has been invested in spot Ethereum ETFs. This indicates growing optimism about ETH's future.
The surge in activity continues; last week, the trading volume of Ethereum ETFs reached a record $1.63 billion, with a weekly growth rate of 44%.
Analysts say this growth is consistent with the pattern of Bitcoin ETFs, which experienced an initial stagnation period before entering a phase of sustained growth.
As a result, Ethereum's price skyrocketed, rising by 25%, marking the largest weekly gain in six months. Many believe these changes are signs of Ethereum's accelerated development, which may lead to further gains.
The changing landscape: Layer 2 solutions
While there are positive aspects, the growth of the Ethereum network has sent mixed signals. The number of newly created ETH addresses is below the levels seen during previous bull market periods.
Experts believe the cause of this is due to Layer 2 options such as Base. Since these technologies are built on Ethereum's infrastructure, transfers can be conducted faster and cheaper. This makes direct connections to the Ethereum main chain less critical.
Nevertheless, the significance of Ethereum has not diminished due to the development of Layer 2. The token remains indispensable in the decentralized finance (DeFi) and NFT ecosystems. In fact, this expansion enhances Ethereum's fundamental capabilities while improving its scalability and accessibility.
Ethereum's detachment from Bitcoin
The independence of Ethereum relative to Bitcoin is becoming increasingly evident. The 180-day correlation between the two cryptocurrencies has fallen to its lowest point in three years, dropping below 0.5. Analysts believe this change indicates that Ethereum is now more influenced by its unique market dynamics rather than Bitcoin's price fluctuations.
As Ether continues on its own path, the necessity to independently assess its potential is increasing. Ethereum is proving itself to be more than just a rival to Bitcoin—whether through the adoption of Layer 2 solutions, institutional interest, or increased ETF activity, it is carving out its own space in the crypto world.
