Cryptocurrency Ether surpasses $4,000 mark amidst substantial inflows into spot exchange-traded funds (ETFs)
In the first quarter of 2023, Ethereum experienced a significant price surge, reaching an intraday high of $4,340 on Sunday. This rally was driven by a confluence of factors, including institutional buying, regulatory clarity, network upgrades, and the growth of decentralized finance (DeFi) and non-fungible token (NFT) activity.
Institutional investors, along with large whales, accumulated billions of Ether, signaling confidence in the digital asset. Regulatory clarity and the approval of Ethereum-based Exchange Traded Funds (ETFs) opened new avenues for institutional investment, driving demand for Ethereum.
Network upgrades, such as the Pectra upgrade in May 2025, addressed past scalability concerns, lowering transaction fees and increasing throughput. The growth in DeFi and layer-2 scaling solutions led to higher transaction volumes and staking activities on the Ethereum blockchain.
The surge propelled Ethereum to multi-month highs, moving close to its all-time highs from 2021. Ethereum outperformed Bitcoin during this period, with ETH rising sharply while Bitcoin's price either stagnated or dipped moderately.
The surge intensified debate about Ethereum as a "macro trade" over the next decade due to its foundational role in tokenization, decentralized finance, and new AI-linked blockchain applications. On-chain metrics showed about 97% of ETH holders were in profit, boosting market confidence but also raising caution about potential short-term profit-taking.
Unlike Bitcoin, which faced potential headwinds due to a looming major liquidation of 61,000 BTC by the UK government, Ethereum did not have equivalent overhangs or sell pressure. While Bitcoin saw outflows or stagnation during Ethereum’s surge, Ethereum enjoyed increasing ETF inflows and institutional buying, causing a capital rotation from Bitcoin to Ethereum.
This divergence in behavior marked a notable shift since Bitcoin often leads crypto market movements. However, in this period, Ethereum took the lead, driven by different fundamentals and market narratives.
In recent news, there has been a surge in investor flows into U.S.-listed spot Ether ETFs. Over a 12-hour period on Friday, $156 million worth of liquidations were triggered for those betting on a lower price for ether. Ethereum's native token, ether, has reclaimed the $4,000 mark for the first time since December 2024.
When adjusted for Bitcoin's roughly four-times larger market capitalization, the Ethereum figure would be comparable to about $2 billion in Bitcoin inflows. ETH is currently trading 12.7% below its all-time high of $4,891, which it touched in November 2021.
Arthur Hayes, co-founder of BitMEX, sold $8.32 million worth of ETH the week before and had to buy it all back, emphasizing the strong momentum behind Ethereum during this period.
In conclusion, Ethereum’s Q1 2023 surge was underpinned by strong institutional demand, improved network fundamentals, regulatory progress, and expanding DeFi applications, which collectively increased its attractiveness relative to Bitcoin. This led to significant price gains and a shift in market dynamics favoring Ethereum during that timeframe.
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