Ethereum Rises Past $3K Amid Bitcoin Surge

Ethereum, the world’s second-largest cryptocurrency by market capitalization, has broken through the $3,000 threshold for the first time since August, marking a significant milestone amid a broader market upswing. Peaking at $3,056 early Saturday, Ethereum’s 20% weekly climb has outpaced Bitcoin’s 10% rise, fueled by President-elect Donald Trump’s pro-crypto stance, which has injected fresh optimism into digital assets.

Bitcoin, meanwhile, has continued to set new records, reaching an all-time high of $77,723 on Friday afternoon. This surge, driven by expectations of crypto-friendly policies under Trump, highlights how the current political climate is influencing the crypto sector. Investors have poured billions into Bitcoin ETFs this year, and Bitcoin’s market dominance over Ethereum recently hit a three-year high.

Regulatory Shifts Spark Optimism for Ethereum

Although Bitcoin has consistently outperformed Ethereum in 2024, Ethereum’s DeFi ecosystem remains a vital part of the blockchain industry. However, regulatory uncertainties have loomed over Ethereum, with the SEC previously issuing enforcement threats against major DeFi platforms like Uniswap. This has stoked concerns about Ethereum’s regulatory future, casting a shadow over its recent growth.

A Trump-led SEC leadership change could signal a shift toward a more collaborative regulatory approach for Ethereum. According to Kraken’s Head of Strategy, Thomas Perfumo, the new administration may bring relief to DeFi projects, making Ethereum’s decentralized finance ecosystem more appealing to investors. As evidence of this renewed optimism, governance tokens for popular DeFi platforms have surged—Aave’s token rose 29% to $183, while Ethena’s token jumped 34% to $0.50.

Ethereum ETFs Gain Traction, Fueling Bullish Momentum

In May, Ethereum received a regulatory boost when the SEC approved spot Ethereum ETFs, confirming its commodity status. Despite this, enthusiasm was dampened when Grayscale’s Ethereum Trust experienced significant outflows, adding selling pressure to the asset’s price. The ETFs had a slow start, but Trump’s win has sparked renewed interest, and this past Thursday saw $80 million in inflows to Ethereum ETFs, marking one of the best days since their launch.

This positive momentum is being matched by trader sentiment, with Ethereum’s recent price gains signaling a bullish outlook. According to Nick Forster, founder of Derive, a DeFi options protocol, both short-term and long-term Ethereum option trades are reflecting strong optimism. “The market maintains a strong bullish sentiment,” Forster said, pointing to traders’ expectations of further price appreciation in the weeks to come.

Dencun Upgrade Fuels Layer-2 Adoption but Raises Concerns

Ethereum’s growth this year has also been fueled by the Dencun upgrade, which has made layer-2 networks more cost-effective for users. This upgrade created a designated space for transactions on layer-2 networks, reducing fees and improving efficiency. However, the upgrade has also led to inflationary pressure on Ethereum’s supply, sparking debate within the community about its long-term impact.

Some analysts argue that the upgrade’s inflationary effect may limit Ethereum’s upward potential by increasing the supply of tokens, which could lower demand. Still, traders remain optimistic about Ethereum’s future, with the recent market trends showing a surprising upturn in sentiment for the asset.

Conclusion

Ethereum’s break past $3,000 represents a renewed wave of bullish momentum as the crypto market reacts to a favorable regulatory outlook under President-elect Trump. While Bitcoin’s dominance continues to hold strong, Ethereum’s position in DeFi, coupled with its recent ETF inflows and regulatory shifts, could see the asset reach new heights. As the debate around Ethereum’s network upgrades continues, market sentiment is leaning bullish, with investors eager to see where Ethereum’s price journey goes next.