Increasing expectations of spot Ethereum ETFs being approved in the United States caused the price of Ether (ETH) to jump over 26% over the last two days to trade at highs not seen since March 15.

Since hitting $3,800, ETH price has pulled back slightly, but the possibility of a spot Ethereum ETF approval and fundamental factors and on-chain metrics suggest that the altcoins uptrend remains intact.

Increasing open interest backs Ether’s uptrend

One factor supporting Ether’s upside is increasing open long ETH positions in the futures market. Data from on-chain market intelligence firm CryptoQuant shows Ethereum’s total open interest in the derivatives market increased from 2.8 to 3.2 million ETH in a few hours on May 20 after rumors emerged that the United States Securities and Exchange Commission (SEC) was making a U-turn on the approval of spot Ethereum ETFs. This is the highest open interest since January 2023.

CryptoQuant analysts noted,

“Traders in the perpetual futures market aggressively opened long positions in Ethereum, expecting higher prices after rumors that the spot Ethereum ETF in the USA could be approved in May.”

In U.S. dollar terms, ETH open interest has now increased to a record-high of $14.68 billion. High open interest simply indicates that the underlying trend is strong and that investor confidence in Ethereum may continue.

Traders now prefer Ether to Bitcoin

The potential approval of a spot Ethereum ETF this week has sparked discussions among analysts about the possible implications for Ethereum price.

According to CryptoQuant analysts, there are now more buy ETH orders in the perpetual futures market compared to other types of orders. The chart below shows the taker-buy ratio is above one, indicating that buy orders in the perpetual futures market are now larger than sell orders.

“This puts upward pressure on prices.”

Additional data from CryptoQuant also revealed that traders now prefer to have more exposure to Ethereum relative to Bitcoin. This is shown with the Ethereum-Bitcoin Open Interest ratio (violet line in the chart below), which spiked from 0.54 to 0.67 on May 20. This means that Ether’s total open interest is 67% of Bitcoin’s.

“A higher ratio implies that traders prefer to have more exposure to ETH than Bitcoin at the margin, and vice versa.”

Similarly, data from TradingView reveals that the ETH/BTC trading pair increased from a low of $0.04572 on May 20, rising 19.6% to reach a two-month high of $0.06471 on May 21. This suggests the strengthening of Ether’s price against BTC.

The strength of the ETH/BTC uptrend is reinforced by the position of the relative strength index at 68, suggesting that Ethereum's uptrend is intact.

Related: Ethereum ETF confirmed? VanEck spot Ether ETF listed by DTCC

ETH demand increases

CryptoQuant data reveals that increased demand for ETH seems to have gained traction again amid increased buying from Permanent Holders following the ETF approval rumors. The chart below shows increased ETH buying by Permanent Holders on May 20 based on spot ETF approval expectations.

CryptoQuant defines permanent Holders as “addresses that accumulate ETH and never sell.”

“This type of holders bought 100K+ ETH, the highest daily level since September 2023.”

Popular analyst Ali Martinez made similar observations, sharing the following chart from Santiment showing increased accumulation by ETH whales on May 20.

Market intelligence firm Santiment noted that while the crowd sentiment toward Bitcoin and Solana remains bearish, the hype around Ethereum has reached its highest level since September 2023.

“#Ethereum is seeing the most #bullish crowd sentiment since September with the #SEC likely to approve the first #ETF's, and $ETH's price surge.”

According to data from Alternative.me, the Crypto Fear and Greed Index has risen to the “extreme greed” zone at 76, up from “greed” at 64 last week. This means that retail investors are becoming increasingly positive about cryptocurrencies, and if the SEC approves spot Ethereum EFTs this month, the price of ETH is expected to continue its uptrend.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.