Four years, a Merge, some proto-danksharding, and a rainbomb of ETFs later, and Ethereum looks set to power past its old price peak of $4,878.26 (November 10, 2021). Will there be a new flag planted on the summit at US$4,900?

Such upward action puts the ETH price in the waiting room for the highly symbolic $5000 point. This is where every crypto cat loses their shitake mushrooms and runs into a wall in overexcitement. 

If you’ve been around since the early days, through the wild dips not only in the price but into the bowels of despair, you’ve earned a long, smug stare into the middle distance. Yay for the good times!

What is driving the ETH price up?

So what got ETH back to the big time? Short answer: A perfect cocktail of mainstream financial institutions finally deciding that Ethereum wasn’t just a phase. Nope, this ship is legit and it is setting sail.

The ETF Effect: The TradFi Bros Get All up in That

Green light, then green candles. The SEC approved eight spot Ethereum ETFs on May 23, 2024. This was the regulatory unlock that let exchanges list the funds. And being spot ETFs, rather than just plain old ETFs, this means that the institutions offering them had to buy the Ethereum to offer the spot ETF.

The spot ETH ETFs began trading on July 23, 2024, with roughly $1 billion in first-day trading volume and net inflows topping $100 million. Hello upwards price pressure.

Whale Tom Lee Inhaling the Ethereum

And then there’s Tom Lee. He seems to be positioning himself as the “Michael Saylor of Ethereum.” He’s the newest whale on the block, snorting up the ethereum like Hunter Biden enjoying the white icing sugar. 

Lee has been talking up ETH as something companies could hold in their corporate treasuries, similar to how Saylor pushed Bitcoin for public companies. This is fanatically fanning an already hot ETH fire.

The message from Lee is clear: Swap some cash for ETH and treat it as a strategic asset on the balance sheet. Whether boards actually follow through is another question, but Lee is making a strong, simple pitch to get ETH into the corporate playbook.

Scaling wins become economic tailwinds

We won’t bore you with the technical upgrade news at the Ethereum Network. If you want to be a nerd and sit in a dark unventilated space, reading up on it, do so. It will keep you off the streets at least. But in summary, the Dencun upgrade landed on March 13, 2024, and everything afterwards worked faster and got cheaper. 

Bitcoin's Tailwinds

The rise in the Ethereum price could just be a symptom of other things happening to Bitcoin. The broader crypto bull market has lifted all boats. 

While Ethereum's correlation with Bitcoin remains strong, its unique utility has allowed it to outperform, with ETH/BTC ratios hitting multi-year highs. A rising ETH/BTC ratio suggests that Ethereum is increasing in value faster than Bitcoin.

Plus, with global inflation easing and interest rates dropping, investors are likely to see high-growth assets like ETH as interesting. 

Geopolitical stability, including reduced tensions in key regions, has also encouraged risk-on behaviour. 

What Could Derail the Party?

Nek Minnit. It could all go Pete Tong in a flash, so don’t buy that megayacht full of naked people just yet.

ETF flows can slow or reverse, as we’ve seen in other markets. Technical things can happen to Ethereum Mainnet. People could just get bored of it. All of the developers working on Ethereum projects could get taken by a giant squid while in their naked megayacht. And, the whole world economy could crash in a fireball that could make us all into human smores. What goes up can come down. At lightning speed.

What Now for Ethereum? Is Solana Next?

Currently, ETH approaching US$4,900 feels like a market recognising a functional, scaled, yield-bearing settlement layer, and pricing that in.

The next question is, does SOL get the ETF treatment, and the price action that tends to follow?

Filings are in. VanEck and 21Shares kicked off U.S. spot Solana ETF filings in June/July 2024, with subsequent issuers joining the queue through 2025.

The regulatory path is open, but not necessarily guaranteed. If approved? Then there might be a similar Solana narrative to Ethereum’s narrative.

Solana could be next, if the ETF gates open and buying traction endures. Keep in mind though, that bull markets don’t keep running forever. The beasts need time to fall to the ground and rest. Sometimes for four years, or even more. 

Watch for the SEC’s stance on non-Bitcoin, non-Ethereum spot ETFs, especially SOL. 

But for now, enjoy the view near the peak. Especially if you are Vitalik Buterin, creator of the Ethereum Network, and who has finally returned to billionaire status once more. 

While Buterin enjoys his 10 megayachts with naked people, just keep in mind that parties can come to abrupt ends with the cops arresting lunatics on the roof and you finding guests hiding in a bush behind your house days after. 

Crypto is a volatile ride with many bouts of seasickness and you may not be experienced with seamen just yet.

Make good choices, kids!

The above article is not to be read as investment, legal or tax advice and takes no account of particular personal or market circumstances; all readers should seek independent investment, legal and tax advice before investing in cryptocurrencies. This article is provided for general information and educational purposes only. No responsibility or liability is accepted for any errors of fact or omission expressed therein. CoinJar, Inc. makes no representation or warranty of any kind, express or implied, regarding the accuracy, validity, reliability, availability, or completeness of any such information. Past performance is not a reliable indicator of future results.