In the last 30 days, Ethereum has shown the highest profits within the top 10 by market capitalization with 22.23%. Only surpassed by Bitcoin (40.17%), ETH’s price looks to be driven by two main factors: the launch of the deposit contract for Ethereum 2.0 and the notable recovery of the DeFi sector. At the time of publication, ETH is trading at $460 with a sideways movement of -0.17% within the last day.
Remarkably, the fundamentals are strong for a continuation of this bullish momentum. While the ETH price looks to be entering a consolidation stage, data analysis firm Santiment suggests that the ETH funds on exchanges have touched a two-year low. As the analysis firm says, this may show a reduction of selling pressure on ETH:
“The percentage of total $ETH being held on exchanges today (13.35%) has not been this low since November 23, 2018. The almost exact two-year milestone is a positive sign for #Ethereum holders, who have historically benefited when supply held off of exchanges is kept low. It indicates that large whale selloff probabilities will remain limited.”
In that regard, crypto trader Josh Rager has set a target of $482. Rager believes that ETH is “slowly grinding up to retest highs from September. A break above $482 and I’ll likely look at $500+ targets for the first time since 2018”. Entrepreneur and crypto trader Qiao Wang has shared another interesting perspective. Via Twitter, he says:
“I continue to see more and more reasons why ETH could outperform BTC in the next bull run. Perhaps not on a risk-adjusted return basis, but likely on an absolute return basis.”
However, he emphasized that investors could make more profit by diversifying their portfolio into Bitcoin and “blue chips” from the DeFi sector – tokens that offer higher profit returns than ETH. In that sense, he said:
“I think you’ll do pretty well over the next year or so. But if you want to hold your portfolio to the institutional standard, you need to consider the possibility that BTC + DeFi is a much better portfolio construction. Not financial advice.”
Wang also said that he owns more ETH than BTC and considers sending the necessary 32 ETH to the Eth2 deposit contract but is apprehensive as “the economics doesn’t make much sense”. Other investors have expressed similar opinions. Moreover, the relationship between an increase in the price of Ethereum and the incentives to keep the funds in the Eth2 deposit contract could be inversely proportional.
Investors who send 32 ETH to the deposit contract have to keep it “locked” for two years to receive the staking rewards or 60% of that time, according to Vitalik Buterin. In a bull market with a constant rise in the price of ETH, investors may be inclined to maintain liquidity and have the freedom to take on profits. At the time of writing, enthusiasm for the deposit contract remained modest. So far only 84’512 ETH have been deposited from the 524’288 ETH needed to start phase 0.
Recovery of the DeFi sector and Ethereum price
On the other hand, data from DeFi Pulse indicates that the total value locked (TVL) in the DeFi sector has reached a new all-time high in the last two days. After a period of stagnation at $12 billion, this figure currently stands at $13.75 billion.
The TVL of major protocols has also surged with Uniswap maintaining its dominance of 21.70% and an all-time high of $3 billion. The price of UNI has had gains of 14% in the last 24 hours, surpassing COMP (12.8%) and AAVE (14.7%). Totally, the most popular tokens of the DeFi sector have experienced strong gains in the last few days, which nourishes hopes for a further flourishing of the DeFi.