Author: Chen Ming, Securities Firm China

Cryptocurrency, collective movement!

In recent days, cryptocurrency prices have surged significantly. Among them, Ethereum (ETH) has performed the strongest, with an increase of over 40% in 72 hours, briefly approaching $2,600. Additionally, Bitcoin, XRP, BNB, Solana, Dogecoin, and Cardano have also seen considerable gains.

Analysts point out that the recent collective rise in cryptocurrencies is related to the easing of trade tensions. The reason Ethereum is leading the charge is linked to the technical upgrades being implemented for the coin.

Ethereum Surges Over 40% in Three Days

In the past three days, Ethereum has experienced significant volatility, with its price soaring from $1,811 to $2,597.68, achieving a maximum increase of 43%, significantly outperforming other major digital currency assets like Bitcoin.

As of the time of this report, Ethereum's price fluctuated around $2,540, with a cumulative increase of 39.62% over the past week; Bitcoin fluctuated around $104,000, with a cumulative increase of 8.52% over the same period. Additionally, in the last seven days, Solana has seen a cumulative increase of over 21%, BNB over 10%, Cardano over 15%, and Dogecoin over 37%.

The data indicates that Ethereum has led a broad rebound in cryptocurrencies, and with the easing of global trade tensions and optimistic sentiment regarding network upgrades, Ethereum is expected to achieve its largest single-week increase since 2021.

Ethereum's rebound also reflects investors' renewed focus on the ongoing technical upgrades. On May 7, Ethereum successfully implemented the Pectra upgrade, introducing a series of key technical improvements. This upgrade included significant enhancements such as a higher staking cap and account abstraction (EIP-7702 standard), significantly improving the usability and flexibility of the Ethereum network, while also reducing network fees. This technical upgrade not only brought substantial functional improvements but also injected new confidence into investors, becoming an important technical foundation for this round of price increases. These measures by Ethereum are also seen as necessary steps to fend off competition from rapidly growing rivals like Solana.

Moreover, a "short squeeze" market has also propelled Ethereum's rebound. Since May 8, a typical short squeeze scenario has unfolded in the Ethereum futures market. Data shows that since May 8, there has been a large-scale liquidation of short positions in the Ethereum futures market, with a liquidation amount reaching $438 million, far exceeding the $211 million in long liquidations during the same period. The sharp price increase forced short sellers to buy Ethereum to cover their positions, further driving up the coin's price and creating a typical "short squeeze" upward spiral.

At the same time, the total value of Ethereum's open contracts surged from $21.28 billion on May 8 to $26.77 billion on May 10, and the weekly financing rate for Ethereum perpetual futures rose from 0.10% to 0.15%. These two indicators together suggest that more traders are entering the market and opening new positions, and that long traders are willing to pay extra fees to maintain their positions, further confirming the bullish sentiment among Ethereum futures traders.

Easing of Trade Tensions

From a macro perspective, the easing of global trade tensions is an important reason for the recent strength in cryptocurrencies. According to CCTV News, on May 8, local time, the United States and the United Kingdom reached a new trade agreement, partially retracting tariffs in specific areas and further expanding market access for both parties' products. Additionally, on the morning of May 10, high-level economic and trade talks between China and the U.S. began in Geneva, Switzerland.

This news significantly boosted market risk appetite and created a positive atmosphere for the cryptocurrency market, including Bitcoin and Ethereum. On May 8, Bitcoin broke through the $100,000 mark for the first time since February of this year. Analysts noted that this reflects a rebound in overall demand for risk assets, while U.S. stocks have also continued to rebound from April lows, indicating a clear increase in market risk appetite.

Nexo co-founder Trenchev stated, "Bitcoin's performance on Thursday not only marked its return to the $100,000 threshold for the first time in three months but also reaffirmed Bitcoin's status as the 'ultimate rebound asset,' reflecting the positive impact of improved U.S. trade prospects on market sentiment." Trenchev also mentioned, "Bitcoin is supported by the Trump administration's friendly stance towards cryptocurrencies, and spot ETF investors are continuing to buy." He added that recent market uncertainties have actually propelled Bitcoin's rise, as investors begin to question the dollar's safe-haven status, which may continue to support Bitcoin's trend.

Kraken's global economist Thomas Perfumo pointed out, "Bitcoin's return to six figures coincides with a revival of global market risk sentiment. The stock market is performing strongly, and investors' willingness to allocate to risk assets is increasing, and this revival of 'animal spirits' is quickly spreading to the cryptocurrency space."

Recently, another significant event in the cryptocurrency world is Coinbase's $2.9 billion acquisition of Deribit, the world's largest digital currency derivatives exchange.

According to foreign media reports on Thursday, the U.S. cryptocurrency exchange Coinbase has agreed to acquire the world's largest crypto derivatives exchange, Deribit, for $2.9 billion, marking the largest merger in digital market history. The deal structure shows that Coinbase will pay $700 million in cash, with the remainder paid in stock. Coinbase stated that this acquisition will accelerate the company's global derivatives strategy.

This acquisition marks Coinbase's most ambitious move into the lucrative cryptocurrency derivatives market. Last year, Deribit's total trading volume nearly doubled, reaching nearly $1.2 trillion. Cantor analyst Brett Knoblauch stated, "This is the largest cryptocurrency merger in history, and we believe it is an A+ acquisition for Coinbase."

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