Ethereum reached another record level on Tuesday as traders assessed its limited supply against the euphoria surrounding the launch of ether futures on the Chicago Mercantile Exchange next week.

The second-largest cryptocurrency almost hit the $1,700-level for the first time in history after rallying for almost eleven months that saw its price rising by more than 1,750 percent since last March. Its gain appeared as a part of a broader bullish trend in the cryptocurrency market, boosting many, including Bitcoin, AAVE, and UniSwap, to their all-time highs.

On the whole, the market interest has surged after institutional investors started pouring their capital into the Bitcoin market, believing the benchmark cryptocurrency would act as their hedge against inflation caused by ultra-dovish Federal Reserve policies and the US government’s expansive stimulus programs.

Retail investors also turned to Bitcoin while upgrading their bets in the alternative cryptocurrency markets. Ethereum benefited because of its positive correlation with the top cryptocurrency. A flurry of optimistic fundamentals, including Ethereum’s switch from energy-intensive proof-of-work protocol to a yield-friendly proof-of-stake mechanism, also helped push its prices higher.

Ethereum traders turn investors following its 1,700 percent rally since March. Source: ETHUSD on TradingView.com

As a result, traders are showing signs of becoming long-term investors already, anticipating that the Ethereum price could hit $2,000 in the coming sessions. That appeared evident with reports of a massive ether outflow from all the cryptocurrency exchanges. As a result, there are now fewer tokens in active circulation, causing a liquidity crisis against rising demand.

“Ethereum has increasingly locked into DeFi (Decentralized Finance) protocols, while investors are also moving Ethereum into their own personal cold storage to keep it long-term,” said Simon Peters, an analyst at online investment platform eToro.

“It’s clear from the price that this declining supply is quickly moving into prices. Since institutions are expected to increase their positions, we expect the price of ethereum to increase from here,” he added.

Meanwhile, CME’s decision to launch Ethereum Futures next Monday is also acting as a tailwind to the cryptocurrency’s uptrend.

“The listing of ethereum futures on a regulated exchange should serve to enhance the crypto market structure by allowing investors to gain exposure to the second most important cryptocurrency as a diversifier to bitcoin, or for simply hedging existing ethereum exposures,” said JPMorgan analysts in their note to clients.

Nevertheless, the bank warned about an imminent downside correction after the Ethereum Futures launch, blaming physical holders’ tendency to hedge their exposures.

For the past few days, Grayscale investors added more Ethereum than Bitcoin.

Grayscale $ETH trust now holds $5 billion worth of Ethereum, 2.6% of the total supply. pic.twitter.com/ndBtXBg9ns

— unfolded. (@cryptounfolded) February 4, 2021

Technical chartists think otherwise. Many of them noted that ETH/USD is on its way to hit $2,000 based on fractal structures taken from the Bitcoin market. The BTC/USD reached $42,000 almost two months after taking its previous all-time high, near $20,000.

“So far ETH is mimicking the BTC move,” said Scott Melker, the host of the WOAS podcast. “All-time high, consolidate for about two weeks, break on strength.”

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