Friday, 15 October 2021 05:35

Ethereum (ETH) Climbs 6% Overnight As It Closes In On $4,000 Mark

Ethereum (ETH) was trading below $2,000 level three months ago, after a rapid fall from all-time high $4,350 in May this year. Now it seems that the second largest crypto asset is making a recovery.

According to CoinMarketCap, the price of ETH jumped 6% in the last 24 hours and shot past $3,800 for the first time since early September. At the time of writing it trades for $3,825.

ETH/USD Source: CoinMarketCap

While there is no one cause for today’s price jump, but if zooming out reveals a longer upward trend. The price of Ethereum is on 900% upside in the past year. 

Here are some thoughts on what has contributed ETH’s growth:

The network’s core developers are making progress toward Ethereum 2.0, which will move the blockchain from its current proof-of-work algorithm to proof of stake. The move, which replaces miners with “staked” validators to process transactions and provide security, promises faster transactions and lower fees, a major concern for a network that frequently becomes congested. 

The rise of decentralized finance (DeFi) last fall and increasing popular interest in NFTs, the unique digital tokens that convey ownership of a digital or real-life collectible or asset, is a major reason for the congestation. DeFi originated on the Ethereum network, and while Solana, Binance Smart Chain, and others have created their chains to be compatible with peer-to-peer lending and trading applications, Ethereum is still responsible for over two-thirds of the total value floating around in DeFi, according to DeFi Llama.

Also NFTs first appeared on the Ethereum network before finding their way to other chains, including Stacks and Flow. The largest NFT marketplace, OpenSea, sports a monthly trading volume in the billions, while NFT-based game Axie Infinity now has over half a billion in monthly trading volume, per the latest statistics from DappRadar.

With Ethereum as the lingua franca connecting users to DeFi, NFT, games, and other applications, all of which are gathering more users and funds, demand for ETH is on the rise.

ETH supply has slowed down. An August upgrade to the network meant that transaction fees that would have gone to the network’s miners instead went into a separate wallet, where they would be effectively destroyed. The upshot is that, with every new block created, a little bit of ETH disappears forever, slowing the rate of inflation and helping pump the price.


Read 406 times