Ether prices continued to extend their gains on Tuesday, August 12, surpassing $4,500 for the first time in more than three years. The world’s second-most valuable digital currency by total market value reached as much as $4,638.00, according to Coinbase data from TradingView. At this point, the cryptocurrency was up close to 40% this month, after falling to roughly $3,375.00 on August 2, additional Coinbase figures from TradingView reveal. When explaining the latest price gains, several analysts who offered input for this article pointed to a range of factors, including strong flows into exchange-traded funds (ETFs) offering exposure to the digital asset. Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, for example, commented on these developments via email, stating that “ETH’s breakout is being driven by renewed inflows, a supportive macro backdrop, and optimism around potential spot ETF approvals.” Brian Huang, cofounder of fintech firm Glider, also weighed in, highlighting several variables as causing ether’s latest gains. “Institutional buyers are stepping in: digital asset treasury holdings of ETH have surged this summer, signaling increased long-term confidence from corporate treasuries,” he stated via email, citing data from Blockworks. “ETH ETFs have also seen record inflows, suggesting traditional investors are positioning for further upside,” added Huang. “On the adoption front, Stripe and Circle have both announced EVM-compatible L1s, reinforcing Ethereum’s position as the universal settlement layer for Web3. Combined, these factors create a powerful narrative of institutional demand, mainstream integration, and network dominance that is helping drive ETH’s latest rally above $4,500,” he noted. Momentum Trading Some analysts who offered input for this article emphasized the impact of momentum trading, referring to investors buying the cryptocurrency with the expectation that it will continue its current upward trend. DiPasquale spoke to this, stating that “Once it cleared major resistance, momentum traders piled in, amplifying the rally. With liquidity improving and sentiment turning bullish, buyers are positioning for further upside after a long period of consolidation.” Tim Enneking, managing partner of Psalion, also commented on this development. “Right now, ETH is a momentum trade, where it is trying to reestablish its parity with BTC. Nothing fundamentally shifted over the week that would justify a 50% increase – much less more than doubling over the past six!” he stated via email. “But let’s put the move into perspective: for ETH to simply regain its strength relative to BTC would still have to increase by almost $1k without BTC putting in a new ATH,” Enneking added. “Almost exactly one year ago, BTC was at $49k; on the same day, ETH was at $2.1k,” he noted. “At its new ATH, BTC has been up 2.5x from that level for a month; even with this current major move up, ETH is up just over 2x from that level. To equal BTC’s performance, ETH would have to hit $5.3k – without BTC moving above $123k.” “The same analysis can be conducted with dominance, and we again see that ETH is simply recovering from deep recent lows,” Enneking concluded. Traders Favor Ether Over Bitcoin More than one market observer described ether in relation to bitcoin, claiming that at least right now, investors are flocking to the altcoin instead of the world’s most prominent digital currency. Bitcoin has reached repeated highs during its current bull cycle, while ether has not managed to surpass the all-time high it reached in late 2021. Julio Moreno, head of research for CryptoQuant, commented on this situation, stating via Telegram that “ETH continues to be favored by investors and traders over Bitcoin, increasing the demand for ETH relative to Bitcoin. This has caused the price of ETH to rally and outperform Bitcoin’s.” “For example, ETH holdings by ETFs have been growing faster than Bitcoin as seen in the ETH/BTC ETF Holdings Ratio increasing to 0.15 from 0.05 in early May," he said. The chart below illustrates these developments: “A similar situation can be seen in the spot trading volume of ETH outpacing Bitcoin’s in the last five weeks,” he emphasized. The chart below helps visualize this situation: Rising Sentiment One analyst attributed ether’s recent price gains to a shift in the mindset of investors, stating that they had been overly bearish about ether at some points. “I believe a lot of this was just generally an overly bearish sentiment,” Daniel Polotsky, founder & chairman of CoinFlip, stated via email. “In June, I told Forbes that Ethereum had come under pressure due to concerns about scalability and transaction fees, but that these concerns were somewhat overblown,” he said, elaborating on the situation. “I had said at that time that Ethereum could be a compelling buy at those levels, because there tends to be a reversion to the mean," said Polotsky. “In April, ETH hit a very low point vs. Bitcoin, when it was trading at 0.019 ETH per BTC. That ratio between the two hadn’t been seen since late 2019, meaning that the sentiment was probably way too bearish and not matching reality,” he continued. “The reversion seems to be playing out right now, as Ethereum has skyrocketed past $4,500," Polotsky concluded.