Ether (ETH), the native token of the Ethereum network, has seen a 5.5% increase since Dec. 27, despite not being able to break the $2,400 resistance. Crypto traders are now asking what has been driving the price of Ether up and whether these factors remain relevant.
The DeFi crypto sector, NFTs, DAOs, and Web 3.0 are some of the differences between Web 1.0, 2.0, and 3.0 that could be influencing the price of Ether. Crypto investors are also keeping an eye on upcoming events in the cryptocurrency space, such as Yahoo Finance’s Crypto Conference, to determine whether these will have an effect on the price of Ether.
Ether price reaches a 19-month high as traders anticipate a rally above $2,500
The intraday peak of $2,446 on Dec. 28 was observed 19 months ago. This surge happened while the overall cryptocurrency market capitalization stayed stable at $1.68 trillion. This implies that Ether’s rate could keep its bullish trend toward $2,500, even though the average transaction fee is more than $5. Although this may not appear excessive, it can be troublesome for most decentralized application (Dapp) users.
It is easy to be deceived by the narratives that rivaling chains are gaining traction as critics state that the Ethereum network has failed due to its limited scaling and privacy solutions at the base layer level. This negative talk has been intensified by the recent outperformance of Solana (SOL) and BNB (BNB), which have increased 78% and 44%, respectively, in the past 30 days. For instance, a seasoned Solana ecosystem developer, Matty Taylor, posted about this issue on X social network.
But, this analysis overlooks the undeniable success of Ethereum layer-2 blockchains and the supremacy of the Ethereum Virtual Machine (EVM). Moreover, the Ethereum network’s total value locked (TVL) of $29.6 billion invalidates much of the pessimistic assessment. In comparison, BNB Chain holds a mere $3.6 billion TVL, while Solana’s latest data stands at $1.4 billion, according to DefiLlama.
Someone could argue that not every DApp requires a huge TVL, and even the decentralized finance (DeFi) sector is working to maximize the usage of its deposits. Thus, other metrics like transactions and the number of active addresses are more suitable to measure adoption.
Besides its absolute layer-1 superiority, the Ethereum network has posted a 38% growth in volumes over the past 7 days, distancing itself from BNB Chain and Solana. Notable highlights on Ethereum include Uniswap’s $20 billion volume in the period, followed by Balancer’s $9.4 billion and Cowswap’s $0.9 billion. In comparison, BNB Chain’s leading application PancakeSwap has gathered $4.2 billion in the same period.
To sum up, the crypto market is growing, and Ethereum is leading the way with its DeFi, NFTs, DAOs, and Web 3.0. Yahoo Finance is a great source to track the upcoming trends in the crypto space.
Ethereum’s layer-2 scaling solutions have exceeded expectations in terms of activity
The crypto ecosystem of Ethereum layer-2 solutions has outperformed all its competitors in terms of the number of active addresses involved in DApps. Polygon network, along with the privacy-focused zkSync Era, has helped the collective Ethereum rollups reach 2 million unique active addresses (UAW) within a week. Soon, the zero-knowledge rollup is expected to launch its token, which will drive the demand for its network.
Ether’s price growth was further boosted by Vitalik Buterin’s research on Dec. 28. He proposed a method to reduce the load on validators, which could theoretically reduce the number of required signatures by 70% and make the process more quantum-resistant. His proposal included three solutions – decentralized staking pools, “light” staking method, and rotation between accountable committees.
The upcoming Ethereum upgrade, Cancun, is scheduled to be tested on Jan. 17. It will reduce transaction fees and introduce new features for bridges and staking pools. Notably, it will include EIP 4844, or “proto-danksharding,” which will improve rollup networks’ efficiency by using “blobs” for temporarily storing transaction data, significantly reducing layer-2 transaction fees.
Overall, data indicates that Ether’s rally is a result of increased network and ecosystem use, dominance in terms of DApps deposits, and expectations for further improvements from upgrades. These changes will likely secure Ethereum’s position as the leader in terms of smart contract processing and staking mechanisms.
Subscribe to our email newsletter to get the latest posts delivered right to your email.
Comments