Ethereum price breaks through $2,900

The second largest cryptocurrency in terms of market capitalization, Ethereum, broke through the USD 2,900 mark this morning. It is the highest level for ETH since April 2022. The announcement of the upcoming Dencun upgrade is probably largely responsible for the strong course performance of the past few weeks.

Dencun is intended to significantly increase the efficiency of Ethereum's layer 2 networks, which is intended to compete with powerful blockchains such as Solana or Sui. The update is expected on March 13.

But the recent application for a spot Ethereum ETF from asset manager Franklin Templeton has also likely been a decisive factor in the price increase. Once approved by the U.S. Securities and Exchange Commission, the ETF is expected to generate revenue through Ethereum's staking mechanism.

Investors are apparently expecting a similar impressive rally in the run-up to the approval as for the approval of numerous Bitcoin spot ETFs in January of this year. World's largest asset manager BlackRock served in November already filed an Ethereum ETF application with the SEC.

In addition, Ethereum's supply dynamics have likely contributed to the recent price increase. More and more coins are being staked or locked in smart contracts. Exchange holdings decline rapidly.

A burn mechanism also constantly reduces the quantity in circulation. Thus, if demand remains constant, a supply shock is imminent, just as with Bitcoin. As a result, ETH is now heading toward the USD 3,000 mark.