Jul 28, 2020
Ethereum: the 330$ reached with the acceleration of DeFi and Ethereum 2.0 as catalysts
A short overview: ETH/USD
Aggressive growth of Ethereum addresses and whale alerts
Ethereum miners’ income: 80% increase in one month
DeFi and Ethereum 2.0 behind the rise
The Ethereum blockchain overtook the Bitcoin blockchain for the first time in history to become the most used on Monday 27th July. The Ethereum network price exploded with an incredible performance this week of July 27th, 2020, increasing by 40% since the beginning of the week. The ether (ETH) surpassed the $253 resistance on July 22nd, which put an end to its consolidation and resumed the upward trend by approaching the $330 mark on July 27th.
Between the enthusiasm generated by the growing demand for DeFi and the launch of Ethereum 2.0, investor interest in Ethereum increased and allowed for a gradual rise in Ether.
A short overview: ETH/USD
According to Santiment, a data analysis company in the cryptography industry, this would be the 42nd time ETH has exceeded $300:
‘As $ETH finally moves out of its long $200 to $250 daily proximity range, we are revisiting our historical model that illustrates the number of times a daily proximity transition has occurred between levels of psychological support. ‘
Over the past few days, the Ethereum share price has gained a positive momentum which has pushed the relative strength index deep into the overbought zone.
In mid-May of last year, the correction was shallow and the ETH/USD pair resumed its upward movement after a few days of consolidation. The ETH/USD pair could rally to $400 if buyers take control above $320 in the next few trading sessions.
Aggressive growth of Ethereum addresses and whale alerts
Ethereum is today considered as the second largest crypto in the world in terms of market capitalization, which is valued at around 30.5 billion dollars (USD).
Recently, some of its key indicators seem to be pointing upwards. At the same time, we can see a continuous growth in the number of ETH addresses, with an increase of almost 4000 % over 3 years. According to Glassnode data, while there were only 1 million ETH addresses with a positive balance in May 2017, there are now almost 40 million addresses with a balance greater than zero.
Due to the boom in Decentralized Finance, active ETH addresses have by far replaced active Bitcoin addresses.
Furthermore, the data show that the number of active addresses on ETH’s intelligent contracting platform has exceeded that of Ethereum’s other competitors. Tokens such as TRX, EOS, ADA and XTZ were then eclipsed.
Wilson Withiam, the Messari researcher, posted a tweet about the situation of DeFi and Ethereum’s competitors on the smart contract war:
‘In the last year, thirteen Ethereum competitors have raised over $300 million in total. Nearly all of them were valued well over $100 million.’
At the same time, the Ethereum whales (ETH), which designate the major players in the digital currency market, have been very active lately. According to data provided by ‘Whale Alert’, these whales moved 935,746 ETH worth $255,458,658 (USD) in 8 transactions in a matter of minutes, which shows that a large number of transactions took place in the Ethereum market.
Ethereum miners’ income: 80% increase in one month
The daily income of Ethereum’s miners increased by more than 80% in one month, according to data from the Ethereum Sparkpool mining pool.
- The Sparkpool data shows that the daily income of Ethereum miners was approximately $1.85 per 100 megahashsecond (MH/s) on the grid on June 27.
- Over the past month, this ratio jumped 80% with a high of $3.4 on July 27.
This increase in profitability is due to soaring transaction costs on the network, as well as relatively slow growth in competition from other miners.
DeFi and Ethereum 2.0 behind the rise
Aside from the fact that the ether is becoming increasingly attractive to investors, the first and perhaps the biggest catalyst for the ether’s upward trend in recent months has been the explosion of the DeFi market. The advent of decentralized finance applications (DeFi) has finally paid off.
Between May and July 2020, the DeFi market grew at such a rapid pace that the total value of protocols almost quadrupled to $3.75 billion.
Due to congestion caused by the growing use of the Ethereum network, users have to pay higher gas and transaction fees to process their payments or smart contracts. Note that gas is a unit that measures the amount of computational effort it will take to perform certain operations. It is a predefined value, agreed upon by the entire network. By using a certain amount of gas and an associated price per unit of gas, we will have the necessary cost, expressed in ETH, to carry out a transaction.
According to John Todaro, the head of research for the institutional trading platform TradeBlock, the growth of DeFi would increase the price of ETH in the long term. He said:
‘Let’s go back to a report we published in 2019 on the impact DeFi could have on demand for Ethereum. We have not yet seen this surge in the price of ETH, but there is no doubt that the rapid growth in demand for DeFi will push the price of ETH up in the longer term’.
Another important reason for the rise in ether is the arrival of Ethereum 2.0, which in the longer term could act as a new catalyst, especially as we approach Q4 2020.
In fact, the final test of Ethereum 2.0 has recently been announced, and the developers seem eager to get the project up and running as well as the crypto sphere community. Earlier this week, Ethereum developers, led by fork coordinator Afri Schoedon, said that the final testnet of Ethereum 2.0 for the network would begin on August 4th.
According to Schoedon on GitHub, the Medalla testnet should be the last testnet before the main network launch:
‘Before such a backbone can be launched, we need testnets that mimic backbone conditions as closely as possible. For this, we need stable, durable and persistent test networks that are not supported by a single customer, but by several customers, ideally all customers’.
Ethereum is a blockchain designed for the creation and development of decentralized applications through the deployment of smart contracts created and operated without fraud, interruption, control or interference from a third party. Ethereum has seen positive progress in recent days, the confluence of the booming DeFi market and the arrival of Ethereum 2.0 are in particular the main causes of this long-awaited evolution by crypto enthusiasts.
It can therefore be said that everything concerning Ethereum is taking a strong upturn, as is the case with its miners, who have also experienced an increase in income of about 80%. Not to mention the continuous growth in the number of ethereum addresses and the whale transactions that have been very active recently.
At the time of writing, an Ether is worth $319; will the price continue to rise to a new high in 2020? At Magna Numeris we think that this is just the beginning and we look forward to the rest! What do you think?
Written by Laetisia Harson, Project Manager at Magna Numeris
