Ether ( ETH ) price has rallied 58% in the last 30 days, outperforming the broader cryptocurrency market by 14%. Despite failing to sustain levels above $4,000, Ether managed to reach its highest price in over two years, closing the gap versus the leading cryptocurrency, Bitcoin ( BTC ), in the period.

Is Ether’s price merely reflecting optimism in the spot Ethereum ETF approval?

Some traders argue that Ether’s bull run has been solely dependent on the spot Ethereum exchange-traded fund (ETF) decision, creating a potential “sell the news” scenario if the event gets fully priced in, at least in the initial weeks. The U.S. Securities and Exchange Commission is expected to give its final verdict on the matter by May 23, with Bloomberg analysts pointing to approval odds at 35%.

Other factors have contributed to the recent price gains, including the Dencun network upgrade scheduled for March 13. The hard fork is expected to drastically reduce transaction fees of Ethereum network’s scaling solutions, a problem that has plagued the network for a long time. Specifically, the 7-day average Ethereum transaction fee has stood at $4 or higher since November 2023.

Ether critics argue that Bitcoin reached an all-time high on March 12 while Ether remains 19% lower than the November 2021 peak of $4,870. However, Ether’s current $480 billion market cap puts the cryptocurrency in the top 20 global tradable assets, ahead of UnitedHealth and ExxonMobil. To put things in perspective, those companies posted 12-month profits of $22.4 billion and $36 billion, respectively.

Ether investors enjoy a 4% yield when participating in the network’s proof-of-stake consensus, but the demand for ETH largely depends on the ecosystem’s activity. Regardless of occurring on the second layer, the growth of the Ethereum ecosystem is beneficial for Ether’s price, as ETH is required for validating and processing transactions on the base layer, besides being used as collateral in some decentralized applications (DApps).

Top blockchains by 7-day DApps volume, USD. Source: DappRadar

The latest data leaves little doubt about the Ethereum network’s dominance, especially when layer-2 solutions are included. Additionally, even during periods of $20 or higher transaction fees, the Ethereum base layer has amassed nearly 590,000 active addresses, and its volumes continue to grow. Yet, a more granular view is required to understand if the growth was restricted to a handful of projects due to airdrops or other factors that might have propelled the short-term demand.

Top Ethereum network DApps, 7-day change. Source: DappRadar

Data shows consistent growth across major decentralized exchanges (DEX) and aggregators but was slightly disappointing for the nonfungible token marketplaces. In essence, the Ethereum network use is not particularly promising given that the tenth-largest DApp, ParaSwap, exhibited a mere 7,100 active addresses in the past week. As a comparison, BNB Chain’s tenth-largest DApp, Jumper Exchange, had 36,500 active addresses in the same period.

Ether pro traders are bullish, but excessive leverage is in play

To assess whether professional traders are skeptical of Ether flipping $4,000 into support, one should analyze the Ether futures. In neutral markets, the monthly futures contracts should trade 5% to 10% higher than regular spot markets to account for their extended settlement period.

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Ether 2-month futures contracts premium. Source: Laevitas.ch

The Ether annualized futures premium, commonly referred to as the basis rate, jumped to its highest level in over 18 months on March 11. Levels above 25% typically indicate excessive optimism, but not necessarily an imminent risk as traders can seek alternative funding methods when the opportunity arises.

Similarly, the high premium attracts arbitrage investors willing to short the futures while simultaneously buying spot ETH, therefore balancing out the equation in the medium term. Ultimately, no matter how pro traders are bullish, the risk of a sell-off increases the longer it takes for Ether to break above $4,000 while the futures premium remains high.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.