In the last two weeks, the price of Ether (ETH) increased by 75% as the price rose from $ 222 to $ 400. Many investors believe the Ether momentum is driving the entire market and possibly even pushing Bitcoin (BTC) upwards.
Daily chart of the ETH-USD pair. Source: TradingView.com
Three factors that seem to trigger Ether’s strong recovery are: DeFi, ETH 2.0, and the current protracted recovery taking place in the altcoin market.
DeFi growth is pumping altcoins but there are bearish signs
Since mid-June, he total value insured in decentralized finance protocols (DeFi) has continually increased. The launch of protocol-specific tokens, such as COMP Compound’s example, led to a growing demand for DeFi.
Finally, users discovered a phenomenon called “yield farming”, It involves users who are looking for higher returns in the DeFi market and switch from one protocol to another to get incentives.
The explosive growth of the DeFi market in a short period led to many DeFi connected tokens increasing rapidly. In July, investors apparently sold DeFi tokens and other small-market cap alternative currencies, turning to Ether and Bitcoin.
On August 1, Ether price peaked at 2 years as it rose to $ 395 on BitMEX, but this has warnings from traders against a possible pullback. In fact, cryptocurrency trader Edward Morra said:
“Yes, the parable that comes out of another parable is a sight to behold. Also, this is not sustainable and will correct it. If you’re new to this space, buy the falls, not FOMO at the top. “
ETH 2.0 reinforces Ether’s momentum
A constant positive factor supporting Ether’s upward momentum is anticipation of ETH 2.0. In August, the developers of Ethereum hope to launch final ETH 2.0 testnet called the Medal.
When fully released, ETH 2.0 would phase out miners from the network and reward users for participating in the network. The incentive system would allow users to earn a return on their Ether holdings over a long period.
“Each phase of ETH 2.0 in the next 2-3 years brings Ethereum closer to its final state and will be a catalyst for ETH.”
Altcoins season continues
The recovery of Ether and Bitcoin in the past three days coincided with a drop in altcoin prices. In the short term, the profit-taking cycle could continue if altcoins see a regular bullish trend.
In previous bull markets, Major cryptocurrencies and small alternative currencies showed an inverse correlation, meaning that as the price of Bitcoin increased, the values of alternative currencies fell.
The opposite is still true when the Bitcoin price is stable or consolidates.. This creates a cycle that makes BTC and ETH benefit from multiple manifestations of profit taking.
Satoshi Flipper, a popular trader on Twitter, suggested that in the long term there is a key resistance for Ether at $ 780.
1-week chart of the ETH-USD pair. Source: Satoshi Flipper
It remains to be seen whether the confluence of ETH 2.0, profit-taking rallies and DeFi’s growth could push Ether’s price into areas of higher resistance. For now, sentiment around altcoins generally remains positive in the medium term.
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