Why is the Ether (ETH) price up today?

ETH reserves on crypto exchanges and an increase in institutional inflows into Ethereum investment funds are key triggers propelling Ether’s price higher today. Ether, Ethereum’s native token, increased by more than 2% in the last 24 hours to $3,865 on June 6. The cryptocurrency’s gains parallel those of the broader crypto market, which has increased in value by approximately 1.50% over the same period. Among the key triggers propelling Ether’s price up today are depleted ETH reserves across all cryptocurrency exchanges and an increase in institutional inflows into Ethereum-focused investment funds.

Ether’s HODL sentiment rises

A significant trend among Ethereum traders is the increasing withdrawal of Ether from exchanges, indicating a growing HODLing sentiment. On-chain data from Glassnode shows that as of June 5, Ether reserves across all exchanges stood at just over 12.59 million ETH, the lowest since July 2016. Historical data reveals a direct correlation between decreasing exchange balances and rising Ether prices.

This suggests investors hold their ETH for longer or staking it, reducing circulating supply and enhancing price potential. As of June 6, Ether’s annual supply growth rate was -0.71%, per UltraSound Money, since Ethereum introduced the fee burn feature in 2021. Additionally, Ethereum’s ecosystem has seen nearly ninefold growth in daily active users over the past four years. Bitwise data shows Ethereum, Arbitrum, and Polygon averaged over 250,000 daily active users in Q1 2020, highlighting robust adoption and further supporting price potential.

Institutional investors return to Ethereum funds

Ethereum had a second consecutive week of inflows following the U.S. Securities and Exchange Commission’s (SEC) approval of spot-based Ether ETF filings. According to CoinShares’ latest weekly report, these Ether funds attracted $33.5 million in the week ending May 31. This signals a dramatic reversal in investor attitude, reversing a 10-week streak of outflows exceeding $200 million, and, in turn, enhancing ETH’s upside chances in the days coming up to the prospective Ether ETF debut.

Elevated open interest and rising funding rates

Ether’s price gains today correlate with its elevated open interest and financing rates.  Notably, the U.S. SEC’s acceptance of spot Ether ETF applications followed a huge spike in the amount of outstanding futures contracts—from $14.68 billion on May 21 to $16.97 billion on June 6. The Ether OI peaked at approximately $17.09 billion during this time. Meanwhile, Ether’s financing rates remained positive throughout the period, averaging 0.336% per week.

The growth in outstanding futures contracts shows that traders and investors are more interested and confident in Ether’s future price appreciation. Positive funding rates suggest that long positions (bets on price increases) are prevalent, with traders ready to pay a premium to hold them. Together with institutional inflows and ETF approval, these indicators indicate strong upward momentum for Ether’s price.

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