Ethereum’s Supply-Demand Sweet Spot: Why the Rally Is Just Getting Started

Ethereum has jumped more than 65% in the past month and 160% since April, driven by a growing gap between supply and demand. According to Bitwise CIO Matt Hougan, Ethereum’s current trajectory mirrors Bitcoin’s earlier post-ETP surge, where demand outpaced supply by a wide margin.

Institutional investors and corporate buyers have absorbed over 2.83 million ETH, worth more than US$10 billion (AU$15.25 billion), since mid-May. That figure is 32 times greater than the 88,000 ETH minted during the same time frame. Spot Ethereum exchange-traded products alone accounted for more than US$5 billion (AU$7.63 billion) of this buying pressure.

Corporations have also contributed significantly to the surge in ETH demand. Bitmine Immersion Technologies holds 300,657 ETH (AU$1.72 billion), while SharpLink Gaming owns 280,706 ETH (AU$1.62 billion), with plans to raise an additional US$6 billion to acquire more. Bit Digital, meanwhile, sold off its Bitcoin reserves to purchase more than 100,000 ETH worth (AU$572 million).

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Institutions Poised to Keep Buying ETH

Bitwise estimates that these entities could acquire up to 5.33 million ETH, worth around US$20 billion (AU$30.5 billion), within a year, while only 800,000 ETH is expected to be issued in the same timeframe. That would mark a 7:1 ratio of demand to new supply.

Ethereum’s ETH/BTC ratio has climbed from 0.018 in mid-May to 0.031, reflecting its outperformance against Bitcoin. As ETH treasury companies are valued more highly than the ETH they hold, attracting further investment.

In the short term, the price of everything is set by supply and demand, and right now, there is more demand for ETH than supply. As a result, I think we’re heading higher.

Matt Hougan, CIO of Bitwise

Related: Ethereum Rakes in a Record‑Shattering $2.12B Weekly Inflows Amid Massive Global Crypto Flows