Ether (ETH) is currently wrestling with the $3,000 resistance level, following a remarkable 29.7% surge from Feb. 6 to Feb. 20. Analysts attribute ETH's recent gains to a decrease in supply, driven by growing demand for staking, decentralized finance (DeFi) applications, and the shrinking supply caused by the network's proof-of-stake burn mechanism.

While Ether’s rally to $3,000 is impressive, the real question is can the altcoin gather enough strength to reclaim the sought-after $3,300 level last seen in March 2022?

Ethereum hasn't even seen its demand season yet.When it does we have no idea how high price will go.So much ETH in staking, and restaking, and defi, and getting burnt this cycle - no new supply.Add an ETF to that?There's not enough ETH to go around.

— RYAN SΞAN ADAMS - rsa.eth (@RyanSAdams) February 15, 2024

Crypto investor Ryan Sean Adams, sharing insights on X social network, suggests that "Ethereum hasn't even hit its demand season yet." Adams speculates that the potential introduction of a spot Ether exchange-traded fund (ETF) could boost its price, especially in the absence of "new supply." The supply data clearly shows a decrease of 18,960 ETH in total coins circulating over the past 30 days, according to ultrasound.money. It's essential to note that this metric doesn't necessarily reflect the ETH available for sale, which can be measured using net deposits on exchanges.

Ether net transfers to exchanges, 7-day average. Source: Glassnode

Looking at the 7-day trend, there's a preference for net withdrawals since Feb. 15, although this could change easily, as seen in early January. Contrary to expectations, Ether's price remained relatively steady in the 30 days leading up to Jan. 5 at $2,300, suggesting that whatever triggered the sale wasn't directly linked to a price rally. In essence, the dynamics of staking and demand for ETH in decentralized applications don't seem to directly impact the supply available for sale.

Technically, the potential approval of the ETF could trigger a rally in Ether's price, with analysts estimating approval odds between 50% and 80%, leaving room for a positive surprise. However, the likelihood of Ether consolidating above $3,300 diminishes if Bitcoin's (BTC) bullish momentum falters, signaling that institutional investor inflow might not be enough to drive its price. Additionally, the historical correlation between BTC and ETH prices remains noteworthy.

Ether (ETH) 20-day correlation vs. Bitcoin (BTC). Source: TradingView

There's no surety that the historical trend will persist, particularly with the potential bullish momentum from the spot Ethereum ETF, but sustained decoupling between Bitcoin's and Ether's price has been a rarity in the past 9 months.

Instead of fixating on the anticipated ETF decision in May, traders should examine other catalysts, such as the demand for ETH stemming from airdrop snapshots and the overall Ethereum network demand.

As an illustration, enthusiasm for upcoming Ethereum token launches dimmed after the Starknet (STRK) airdrop, a highly anticipated layer-2 token, plummeted nearly 60% since Feb. 20. This drop was attributed to substantial sell pressure from airdrop hunters and major Ethereum infrastructure firms like Nethermind. Moreover, criticism surfaced regarding participants deemed ineligible for the distribution and controversies surrounding the release of 13% of the supply just two months after launch.

To gauge whether professional traders maintain a bullish stance on Ether's price, grappling with the $3,000 support, one should analyze the price of ETH futures monthly contracts compared to regular spot markets. In neutral markets, these instruments typically trade at a premium of 5% to 10% to accommodate their extended settlement period.

Related: Starknet airdrop largely successful despite controversies

Ether 1-month futures premium vs. spot markets. Source: Laevitas.ch

Note the Ether 1-month futures premium has remained above 14% since Feb. 17, showing no signs of diminishing demand for leverage longs (buys). Additionally, despite signaling bullishness, the metric falls short of displaying excessive optimism seen in the 25% premium from Jan. 2. The data suggests that Ether bulls need not fret about supply on exchanges or the use of leverage in futures markets, making the prospect of ETH surpassing $3,300 still plausible.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

As I waited with the rest of the world for the first bitcoin ETF to be approved, one thing has been gnawing at me: With a handful of exceptions including Fidelity and VanEck, nearly every applicant for a spot bitcoin ETF intends to use Coinbase as its custodian.

David Schwed is chief operating officer of Halborn.

As a cybersecurity leader focused on blockchains, this concentration of risk along with the inherently high-risk nature of crypto custodianship and the still-evolving nature of security best practices gives me pause.

It’s not Coinbase itself that worries me here. The firm has never been hit by a known hack, which explains why so many traditional institutions trust its know-how. However, there is no such thing as an unhackable target – anything and anyone can be compromised, given enough time and resources, which is a lesson I've learned over a career at the intersection of cybersecurity and asset management.

What worries me is the extreme asset concentration in a single custodian. And given the cash-like nature of crypto assets, that makes the situation inherently concerning.

See also: Gary Gensler's Bitcoin ETF Clown Show

It may be time to rethink the “qualified custodian” designation, a regulatory sign-off which in its current form doesn’t necessarily ensure risky blockchain-based assets are necessarily (or best) secured. Further, ideally, digital asset custodians should be subject to more oversight by better-trained regulators, under more rigorous state and federal standards, than they are right now.

Most qualified custodians today secure equities, bonds or digitally tracked fiat balances, all of which are fundamentally legal agreements, which can’t simply be “stolen.” But bitcoin [BTC], like cash and gold, is what’s known as a bearer instrument. A successful crypto hack is like a bank robbery in the Wild West, as soon as it’s in the hands of a thief, the money is simply gone.

So for a crypto custodian, one mistake is all it takes for the assets to disappear entirely.

We also know the forces of global crypto-crime are formidable and determined. To pick just one notorious example, North Korea’s Lazarus Group hacking cohort is believed to have stolen $3 billion worth of crypto over the past six years, and it shows no signs of stopping. Inflows to a bitcoin ETF have been projected at somewhere above $6 billion in the first trading week — making these funds a prime target.

If Coinbase winds up with tens of billions in bitcoin sitting in its digital vaults, North Korea can easily organize a $50 million operation to steal those funds, even if it takes multiple years. Threat actors like Russia’s Cozy Bear/APT29 group might also find going after institutional crypto increasingly appealing as those pools get bigger — potentially much, much bigger.

This is the level of threat that major banks prepare for. One widespread model of risk management for financial institutions utilizes three layers of oversight. First, the business management layer designs and implements security practices; second, the risk layer oversees and evaluates those practices; and third, the audit layer makes sure that risk mitigation practices are actually effective.

On top of that, a legacy financial institution will have external auditors and external IT oversight, as well as numerous state and federal regulators looking over their shoulders. Many, many eyes will examine every aspect of risk and security.

But these multiple levels of redundancy and nesting failsafes require one deceptively simple thing: headcount.

During my time as global head of digital assets technology at BNY Mellon, the investment bank had roughly 50,000 employees, of whom around 1,000 – or 2% – were in security roles. Coinbase, even after recent expansion, has fewer than 5,000 employees. BitGo, also a qualified custodian certified by the State of New York and other jurisdictions, has only a few hundred.

This is not to impugn the intentions or skill of any of these organizations or their employees. But real oversight requires redundancy that these new institutions may struggle to provide at a level appropriate for securing tens of billions of dollars in bearer instruments.

See also: Bitcoin ETFs: The Bull Case

Before those numbers get even bigger (and more enticing for the bad guys), it is well past time to refine the cybersecurity standards for qualified custodian designation. Right now, the designation accompanies trust or banking licensing, overseen by state and federal regulators. These are financial regulators largely focused on traditional banking, not cybersecurity experts, and certainly not crypto experts. They understandably focus on balance sheets, legal processes, and other financial operations.

But for crypto custodians, those aren’t the only kinds of oversight that matter, or even necessarily the most important. There are no industry-wide standards for cybersecurity and risk management practices by crypto custodians specifically, meaning that “qualified custodian” status isn’t quite as reassuring as it might sound. That exposes not just investors but an entire nascent sector to opaque risk with potentially dire consequences.

The approval of a cast of bitcoin ETFs is just the latest step in the continued integration of digital assets into the financial system. You don’t have to trust crypto partisans on that prediction – just ask Blackrock, a legacy giant that championed the ETF. As these developments continue, regulators truly interested in investor protection will focus on adapting to this new world: one in which rigorous cybersecurity standards are just as important to financial stability as honest disclosures and financial audits.

According to Foresight News, the Ethereum Foundation has transferred 1,000 ETH, worth approximately $2.38 million, to an address (0x4e6) primarily used for funding distribution. This transfer occurred two hours ago from an Ethereum Foundation address (0xde0). Since May 2021, the 0x4e6 address has received and distributed a total of 40,900 ETH from the Ethereum Foundation.

The entire crypto world and much of the U.S. financial sector is anxiously awaiting word from the U.S. Securities and Exchange Commission (SEC) on whether it will approve a spot bitcoin exchange-traded fund (ETF). SEC Chair Gary Gensler has chosen this moment to issue a broad warning about the hazards to investors of getting into digital assets.

Gensler – as he's done many times – posted on X to warn people that the crypto sector is beset by scams and fraud, and that many companies in the space aren't following securities laws.

"Those offering crypto asset investments/services may not be complying w/ applicable law, including federal securities laws," Gensler posted, advising his followers that there are a number of things to keep in mind about cryptocurrencies. "Fraudsters continue to exploit the rising popularity of crypto assets to lure retail investors into scams," he added in another post.

Read More: Solana Meme Coins See 80% Price Drop After December Frenzy

It's unclear whether Gensler's words represent a final dig before the agency – as many expect – approves ETF applications that are approaching key deadlines. That moment is widely seen as a major turning point, because fully regulated spot ETFs would allow much easier trading of digital assets for even the most casual investor, and some estimates suggest that could mean tens of billions of dollars flowing into the industry.

Of course, whether or not cryptocurrency businesses are properly approaching securities law is a matter still being worked out in a long list of court cases. Gensler's agency has been found by some judges to be on the wrong side of the argument, though the SEC has also chalked up a few wins, including a recent ruling in the Terraform Labs case that the regulator was right about the company improperly pushing unregistered crypto securities.

Read More: SEC Chair Gary Gensler: 'Far Too Many Frauds and Bankruptcies'