Can Ethereum Achieve Its All-Time High Over The Next Few Months?
The cryptocurrency market is currently on a tear after almost tripling in market cap since the beginning of the year. The leading cryptocurrency Bitcoin just broke its all times high of $20,000, achieved three years ago thanks to renewed interest in crypto assets. And the second cryptocurrency Ethereum has added more than 400% since the start of the year. However, this is about 53% short of its all time high of $1,400 registered at the start of 2018. With the current crypto market bull rally seemingly getting started, the question now remains if traders are likely to see ETH surpass its record. Our analysis shows there is every reason to be optimistic, given there are plenty of factors that seem to be on the ETH side.
The gains have sparked renewed interest in ETH, sending masses on Ethereum trading platforms like PrimeXBT, where they can trade a derivative product of the asset without worrying about owning the actual asset and storing it.
One of the main reasons Ethereum has performed so well this year is the DeFi boom. The smart contract platform houses over 90% of all DeFi projects in existence today. Thanks to increased innovation by various DeFi platforms that have created rewarding incentives like staking and yield farming, masses have jumped on different protocols like Compound and Uniswap, to take advantage of these opportunities. ETH is the native token of Ethereum and plays a crucial role in the ecosystem of these DeFi protocols since it can be used as collateral for staking and lending. Increased interest in DeFi platforms has led to an equal demand for ETH tokens, therefore driving the prices higher.
To put things into perspective, the DeFi market began the year with around $700 million worth of ETH in total value locked (TVL) on various DeFi protocols. Fast forward twelve months later, and that figure has grown to over $16 billion. That’s a whopping 2100% increase within a year.
And as things stand, more innovation is coming into the sector as various projects reconstruct the traditional financial industry in an inclusive, open, and permissionless manner.
Therefore, let’s expect to see more projects launch, which will fuel the price of ETH even higher. Currently, there are over 1500 DeFi tokens in existence, and that number is growing by the day.
Ethereum 2.0 Launch
After several delays, the first phase of Ethereum 2.0 was launched at the beginning of the month, leaving proponents of the second-largest blockchain protocol ecstatic. The launch of the Beacon Chain marks “phase 0” of the protocol transitioning from the current Proof of Work protocol (PoW) to Proof of Stake (PoS), a much more energy-efficient and scalable consensus mechanism.
According to Danny Ryan, Ethereum Foundation researcher, “the launch of the Beacon Chain is a huge accomplishment and lays the foundation for Ethereum’s more scalable, secure, and sustainable home.” However, he notes that there is still much work to do before the main goal is achieved.
The Beacon Chain will serve as the backbone of the new Ethereum blockchain as the network tries to keep pace with PayPal and Visa when it comes to transaction processing speeds. A few weeks after launch, data from Ertherscan shows that about $1 billion in ETH has been locked on Ethereum 2.0. This shows people are already excited about these developments, and it’s one of the reasons fueling the positive momentum witnessed with the price of the token.
On the Beacon Chain, ETH holders with a minimum of 32 ETH will earn rewards through annualized interest on their holdings. Among those already staked is Ether Capital Corporation who had the following to say; “We are excited to be working with the team at Ether Capital on running its validator. Staked has built a reputation for ease and reliability for proof of stake services, and we are grateful for the trust that Ether Capital has put in us.”
By staking the minimum 32 ETH currently worth about $20,000, you will become a validator on Ethereum 2.0.