Ethereum (ETH) Points to New Highs on Active Usage
Ethereum (ETH) is showing signs of continued strength, which may translate into a higher price range. As the Bitcoin price rally stalled, ETH continued to solidify its positions above $3,500.
While the Ethereum network seems to have competition in the face of altcoin projects, most of those projects bring back some of the value through liquidity pools or lending collaterals. The growth of DeFi space is now happening through bridges, which connect liquidity on several blockchains.
ETH traded at $3,552.21, with a modest weekly gain, but some signs of consolidation ahead of a potential price hike. Trading volumes remain consistently above $18B in a 24-hour period, getting close to BTC trading volumes.
ETH Withdrawals Suggest Scarcity on Exchanges
The latest on-chain statistics show a record amount of ETH was taken off exchanges. This would reduce the coins available for spot purchase based on retail buying interest. ETH futures rely on USDT and other dollar-pegged coins to continue. However, spot ETH ownership is important for participation in DeFi and other distributed projects.
In the past few days, more than $1.2B worth of Ethereum was taken off centralized exchanges.
This is still a fraction of the 117M ETH available in circulation. Of those assets generated, about 7.5M are locked in in the ETH 2.0 smart contract, and will not be released back in circulation until staking is implemented. However, most deposits to ETH 2.0 are the minimum of 32 ETH, and are only slightly diminishing the supply of coins.
An additional depletion of ETH comes from the constant burn of transaction fees. Since the launch of the London hard fork in August, more than 340,000 ETH were destroyed, instead of returning to miners.
Ethereum usage is also significant, with more than 1.2M transactions recorded in a day. At the same time, Bitcoin’s network carried around 270,000 transactions per day, showing the effect of token usage and side projects.
The Ethereum network also has an additional activity level based on side chains, smart contracts and other scaling solutions, which translate into an even larger daily usage. Both Bitcoin and Ethereum active addresses hover at around 800,000 per day, for one of the most active usage periods in the past three years.
Can ETH Achieve New Highs
One of the reasons for ETH optimism is that its market price may decouple from BTC price movements. Just months ago, ETH was considered an asset doomed to fail against BTC.
But the boost of DeFi and collectible marketplaces showed additional value for ETH. Now, there are signs of decoupling ETH price moves from the BTC market. The recent price moves of ETH coincided with a period where BTC stalled around $48,000.
ETH remains above 0.07 BTC, while its dollar-denominated price expects a rebounce from the $3,500 range.
The recent market conditions are creating expectations of an upcoming rally, predicting a hike to $5,000 in October.
In the longer term, the most bullish predictions see ETH hiking to $10,000 as its influence on the crypto ecosystem grows.
Is Altcoin Season 2.0 Coming
After at least two major crashes in the past months, expectations are returning for another bullish period that will lift all altcoins. The recovery follows a renewed inflow to both speculative trading and the liquidity pools of several decentralized networks.
Even networks with a different structure usually allow a bridge to Ethereum, allowing tokens to move between DeFi protocols.
The Ethereum-based collection of DeFi tokens has a total market cap above $134B, up from a dip under $70B in July. The top three spots belong to Uniswap (UNI), Terra (LUNA), and the recently growing Avalanche (AVAX).
DeFi token appreciation also affects networks such as Solana (SOL), Fantom (FTM), Polygon (MATIC) and Cosmos (ATOM), which offer various smart contract functionalities and niches. Those tokens have also outperformed the market on various days, revealing demand for active, high-return assets.
The recent price rally also boosted the dominance of ETH to above 19.3%, the highest level seen in four years.
Ethereum Classic (ETC) Left Behind
During the previous ETH rally, one of the forked assets, Ethereum Classic (ETC), rose in unison as it was considered a cheaper version of the same network.
During the latest growth phase, ETC fell behind, stalling just above $58. The recent price moves show ETC was only a speculative bet, while the larger Ethereum network is showing significant support from its ecosystem of projects.
At the same time, the Ethereum Classic network has no significant projects built on top of the protocol, and remains risky for attacks due to a low mining rate and a low number of nodes.
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