How lucrative is it for traders to buy Ethereum now?

Ethereum’s rally to $6,000 is a narrative supported by its increasing market share and capitalization. The altcoin, at the time of writing, was still rangebound around the $2,800-level, based on data from CoinMarketCap, with its market capitalization just under $320 billion too. Combine this with EIP 1559 and the transition to PoS, and it is likely that Ethereum’s market share will increase too, especially relative to Bitcoin.

Source: Twitter

Based on the attached chart, Ethereum’s market capitalization was 48% that of Bitcoin. The aforementioned percentage is anticipated to increase in the future, thus signaling that Ethereum’s rally may slow down, but not stop. In fact, purely in terms of aggregated daily volumes, ETH/BTC spot volume has been at an average level since 26 May 2021.

ETH/BTC Spot – Aggregate Daily Volume || Source: Skew

Based on the attached chart, Ethereum’s trade volume has dropped lately, compared to most of May 2021. However, at the same time, Open interest and trade volume in Futures has increased too. Following the flash crash on 19 May, Ethereum’s recovery was slow. Alas, with the upcoming updates and increasing volume of Ethereum staked, the rally seems to be continuing.

What’s more, concentration by large HODLers was at 41%, and once the figures for the same hike again, the altcoin can be expected to rally even higher.

Additionally, nearly 92% HODLers were profitable at the press time price level, and a rally above $3,000 is likely to push that number higher. The dropping % supply of Ethereum across exchanges is continuing to drop and this is likely to speed up the rally too.

The price has been increasing proportionately with the increase in social volume too. While the selling pressure has increased somewhat, given the change in HODLer composition, it has been absorbed by the increasing demand across exchanges. Now, the drop in accumulation by large investors is a concern in the long-term, alas, Ethereum’s high ROI is likely to drive consistent demand and support the price rally based on the previous few instances.

Short-term ROI || Source: Messari

Based on the attached ROI data for Ethereum, the change v. BTC over the past 90 days was over 130%, thus making it lucrative for traders to buy Ethereum for short-term ROIs. The ROI has been negative over the past month and this may lead to a slowdown and an increase in selling pressure. However, that is likely to change as staking continues before the next update on the network.