Ethereum Lags Even as Traders Bets Big, Rally to $4,500?

ethereum holds steady above $3,300 as cryptocurrency traders prepare for the inauguration of President-elect Donald Trump. Derivatives traders are bullish on ethereum, with open interest in Ether derivatives contracts exceeding $30 billion as of Friday.

Large ethereum wallet investors continue to accumulate the token despite its lackluster price performance in 2024. The altcoin enjoys a high correlation with bitcoin, and recent market movements support gains in Ether.

<h2 class="wp-block-heading" id="ethereum-sees-big-bets-from-derivatives-traders”>ethereum Sees Big Bets by Derivatives Traders

ethereum derivatives data on Coinglass shows a nearly 47% increase in options trading volume in the last 24 hours as derivatives open interest hovers around $30 billion. Options volume exceeded $1 billion in a 24-hour period.

The long/short ratio, used to determine whether derivatives traders are bullish or bearish on a token, is greater than one on Binance and OKX. Derivatives traders are optimistic about an increase in the price of ethereum.

The chart below shows the increase in open interest on ethereum since the last US presidential election. Open interest is below its peak of $31.99 billion, observed on January 7, 2025.

<h2 class="wp-block-heading" id="ethereum-on-chain-analysis”>ethereum On-Chain Analysis

Derivatives Trader Outlook is considered a measure of what traders can expect in the spot markets. When combined with bullish on-chain metrics, the outlook for derivatives traders supports the ethereum price profit thesis.

Data from Santiment shows that the supply of Ether tokens in the hands of large wallet investors has been increasing steadily, meaning that even when the price of eth suffered a drop, traders continued to accumulate. This is a positive sign for ethereum.

The total funding rate aggregated by ethereum is mostly positive throughout January 2025. This represents optimism and hope for price growth among traders.

ethereum held by traders with between 1,000 and 10,000 eth in their wallets rose last week. Similarly, holders with between 1 and 10 million Ether added their eth holdings between the last two weeks of 2024 and January 17, 2025.

<h2 class="wp-block-heading" id="ethereum-market-movers”>ethereum Market Drivers

Data from Farside Investors shows that institutional capital inflows into Ether nearly doubled on Thursday. eth spot ETFs recorded $166.6 million in inflows on January 16, up from $59.7 million the previous day.

Typically, growing institutional interest is bullish for Ether.

Another key driver of the market is the growing on-chain activity from Layer 2 protocols. Data from GrowThePie shows that ethereum Layer 2 chains have seen rapid growth in active addresses, increasing more than 300% in a year and exceeding 10 million weekly. Active wallets on multiple Layer 2 are relatively low, less than 5%.

The growing adoption and utility of Layer 2 contributes to underlying chain revenue, supporting a growth thesis for Ether.

<h2 class="wp-block-heading" id="technical-analysis-and-eth-price-forecast”>eth technical analysis and price forecast.

The eth/USDT weekly price chart shows Ether hovering around the $3,360 level early on Friday. The altcoin is 22% below its 2024 high of $4,107. Two technical indicators, the Relative Strength Index and Moving Average Convergence Divergence, support a bullish thesis for ethereum.

The RSI is sloping upward and reading 53, the MACD is showing consecutive green histogram bars, supporting a bullish thesis for ethereum on the weekly period.

If ethereum finishes its consolidation and surpasses the December 2024 peak, the altcoin could target the $4,578 level and recover towards its previous all-time high of $4,878, as seen on the eth/USDT weekly chart below.

<h2 class="wp-block-heading" id="vitalik-buterins-take-on-ethereum-layer-2-and-the-future-of-ether”>Vitalik Buterin's vision for ethereum Layer 2 and the future of Ether

Buterin recently commented on Sony Block Solution Labs' Soneium. Buterin said the project demonstrates how ethereum Layer 2 is “great for businesses and users” in a tweet on x.

<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter“>

Buterin believes that creating a free market at the Layer 2 level makes it more accessible and useful for businesses and users, supporting the growth of the ethereum ecosystem. The idea is to consider Layer 2 accumulators as companies built in cities within the “ethereum mainnet” state.

The controversy surrounding Soneium was the measures taken to safeguard intellectual property by imposing restrictions on some contracts within the protocol. While it may appear that meme coin traders have been cut off, users can continue transactions on the ethereum mainnet with a delay of a few hours.