Ethereum Gains Momentum: Is ETH Ready to Surge Past $4,000?

Key Insights

• Capital rotation is shifting towards Ether as Solana’s “Hot Capital Ratio” drops to its lowest point this year.

  
  
  

• Open interest in ETH futures is on the rise, now standing at an impressive $58 billion.

• With low funding rates and strong spot accumulation, ETH is eyeing the $4,000 mark.

Ethereum Attracts Capital Over Solana

Ether (ETH) is currently the star of the show in the altcoin market, benefiting greatly from capital rotation. According to Glassnode, the SOL/ETH Hot Capital Ratio—a key measure of short-term capital movement—has fallen to a year-to-date low of 0.045, registering a 42% decline since April. This shift indicates that while both ETH and SOL enjoyed inflows in July, the tide is now turning in favor of Ether.

The Hot Realized Cap metric, which shows where short-term speculators are placing their bets, suggests a declining yet noteworthy ETH-led rotation. The ETH/SOL trading pair has been trending downward for several months, signaling a preference for ETH. Additionally, the ETH/BTC pair is experiencing a resurgence, hitting multi-month highs and surpassing the 200-day exponential moving average for the first time in over two years.

As reported by Cointelegraph, while Bitcoin faces significant selling pressure at $116,000 and below, ETH’s price has rebounded to its average trading range.

Ether’s Calm Funding Rates: A Positive Sign

Recently, Ether’s open interest reached a record high of $58 billion, highlighting increased market participation and investment. Ethereum’s share of total open interest across major exchanges has risen to 34.8%, while Bitcoin’s share has dropped from 59.3% to 47.1%.

Although ETH has yet to break past the crucial $4,000 resistance level, the current futures funding rates suggest there’s still room for growth. Compared to earlier attempts to breach $4,000 in March and December 2024, funding rates have nearly halved, indicating a healthier market environment.

This situation bodes well for two main reasons: Firstly, lower funding rates imply that traders aren’t overly leveraged on the long side, reducing the risk of abrupt liquidations. Secondly, it shows that spot demand—particularly from Ether treasury companies—is driving the price action more than speculative bets.

Nate Geraci, president of NovaDius, notes that “Eth treasury companies & spot eth ETFs have *each* bought approximately 1.6% of the current total eth supply since the beginning of June.”

After a 9.72% correction over the past week following a five-week rally, ETH has quickly rebounded 9%, testing the $3,800 level again on Thursday. With $4,000 within reach, crypto analyst Jelle remarks that this psychological barrier “has been resistance since forever.” He adds, “Once it breaks, I doubt we go back below anytime soon. Price discovery is close.”

This article is not intended as investment advice. Every trading move carries risk, and readers should do their own research before making any decisions.