BitMEX Co-Founder Predicts Ethereum to Reach $5,000

Despite strong performances from other cryptocurrencies like Solana (SOL) and Cardano (ADA), Ethereum (ETH) has been relatively lackluster, failing to break through the $2,500 mark.

However, BitMEX co-founder Arthur Hayes optimistically predicted that Ethereum could soon reach a new all-time high. He said on the social media platform X: "I sold SOL and bought more ETH, ETH = $5,000."

Prior to this, Hayes had predicted that Solana’s price would reach $100, a prediction that has proven to be quite accurate, with SOL recently rebounding to $99.6.

As of writing, Ethereum is trading at $2,270, down 2.7% over the past 24 hours.

Funding rate surge hints at $2,500 key level

Ethereum funding rates have risen significantly recently, indicating that traders generally expect further gains, with a target of $2,500. Data from crypto derivatives tracker Coinglass shows that the ETH funding rate has soared to 0.045%. This shows that traders tend to be bullish on the asset and are willing to pay a premium to hold long positions. This optimism can generate a "positive" cycle, with more traders willing to enter long positions and bet on rising prices.

Grayscale ETHE negative premium narrows

Lumida Wealth CEO Ram Ahluwalia also raised a view that ETH prices could recover and reverse losses, and could even outperform Bitcoin (BTC).

Ram Ahluwalia pointed out that the negative premium of Grayscale Investment’s Grayscale Ethereum Trust (ETHE) has been narrowing in the past few months and rose 4% on December 22.

According to Ram Ahluwalia 's analysis, this development shows that institutional investors choose to buy Grayscale's ETHE products to gain ETH exposure in a regulated manner. As the negative premium of ETHE disappears, marginal flows are likely to flow to ETH spot to obtain staking returns. Therefore, institutions are unlikely to invest more funds in ETHE because the "big gains" have been completed.

According to Stake Rewards, as of December 22, more than 28.6 million ETH have been staked, with a yield of 4.32%. Considering the correlation between the staked amount and the yield, the more users who choose to stake physical ETH, the lower the reward rate or yield.

As the negative premium on ETHE disappears, institutions or large players will move funds to ETH through the spot market, which may push up the price.

Technical indicators

Analyst Denys Serhiichuk said that judging from the ETH price trend on the daily chart, the ETH price broke through the resistance level of $2,331 on the hourly chart in the short term. If the closing price on the day is below this level, it may further pull back to the $2,300 area.

On a longer timeframe, a close at the $2,392 resistance level is something to watch out for. If the upper lead is near or above $2,500, the uptrend could soon continue towards the $2,500 area, and in the medium term, a close near $2,400 is key to further rally, and if bulls are able to gain the upper hand, a test of the $2,500-2,700 area will continue.