In recent months, Ethereum, the second-largest cryptocurrency by market capitalization, has faced challenges in gaining momentum compared to Bitcoin, which has reached new all-time highs several times, most recently on a Friday afternoon in early November. Despite this, Ethereum surpassed the $3,000 mark early Saturday for the first time since August 2, reaching a peak of $3,056. This climb over the $3,000 threshold marks only the second occurrence this year, following a dip to a low of $2,375 on the eve of Election Day.
The rising trend in Ethereum’s value comes in the wake of President-elect Donald Trump’s victory, which has had a favorable impact on the digital assets market at large. This political shift has seen Ethereum’s price increase by 20% over the past week, outpacing Bitcoin’s 10% gain. Nonetheless, Bitcoin continues to set new records, with its latest peak reaching $77,233, according to data from CoinGecko.
In the face of this robust performance by Bitcoin, investors have shown a heightened interest in Bitcoin ETFs, pouring billions of dollars into these products this year alone. This increased attention towards Bitcoin comes even as Ethereum continues to play a vital role in decentralized finance (DeFi), an area that has faced regulatory scrutiny from the Securities and Exchange Commission (SEC), casting a shadow of uncertainty over the sector.
However, the regulatory landscape for Ethereum and its associated DeFi platforms may be poised for change. With anticipated shifts in leadership at the SEC under a Trump administration, a more collaborative regulatory approach could emerge, potentially benefiting Ethereum even more significantly than other digital assets like Bitcoin.
Amid this shifting backdrop, tokens related to Ethereum’s DeFi space have seen appreciable gains. For instance, Aave’s governance token has surged 29% in the past week, while Ethena’s token has increased by 34%. These movements underscore a broader market optimism towards Ethereum, particularly in light of a potential easing of regulatory challenges under the forthcoming administration.
Although Ethereum has recently breached the $3,000 mark, buoyed by Trump’s electoral win, it still lags behind Bitcoin in terms of year-to-date performance. Ethereum’s journey towards reclaiming its all-time high of $4,878 set in November 2021 remains ongoing, with a notable approach towards this peak occurring in March when it briefly exceeded $4,000.
The investment landscape for Ethereum saw a significant development in May, with the approval of spot Ethereum ETFs by regulators, affirming its status as a commodity. However, initial enthusiasm was tempered by outflows from Grayscale’s Ethereum Trust around the time of the ETFs’ launch in July. Despite this initial tepid response, the momentum for spot Ethereum ETFs has seen a resurgence following Trump’s election victory, with one of their best days of inflows occurring on a Thursday, as reported by CoinGlass.
Recent debates have emerged around Dencun, an Ethereum upgrade aimed at improving the efficiency of layer-2 networks. While the update has made transactions cheaper, it has also reintroduced inflation to Ethereum’s overall supply and impacted fee revenue, sparking mixed reactions from the market.
Despite these concerns, the market sentiment for Ethereum remains strongly bullish, with optimism for further gains. This sentiment is echoed by options traders, who exhibit a marked optimism for Ethereum, even more so than for Bitcoin, indicating a broader market enthusiasm for Ethereum’s potential in the near term.