Ethereum (ETH) Almost Doubled This Year
When Bitcoin was in the middle of its stunning rally last year, Ethereum failed to catch any of this, but things have been quite different this year. It is the second-biggest cryptocurrency in the world by market cap, and over the last few weeks, it has left most of the wider market in the dust.
While the rally must come as a welcome boost for ETH holders, it is perhaps also important to figure out the reasons behind the near 100% rise since January. Here is a closer look at some of the factors that were responsible for the surge.
Key Bullish News
One of the important factors behind the growth of Ethereum this year has been the rise in popularity of decentralized finance or DeFi. It is a movement that seeks to use the power of crypto platforms to replace traditional solutions that are currently in vogue in finance.
Recently, the entire value of DeFi applications reached as much as $1 billion, and traders believe that it could eventually lead to further use of the ETH blockchain. On the other hand, the pure dynamics of the market could also be in play in this case.
Demand is now clearly high for ETH, but the supply in the market is going down progressively. This is primarily due to the fact that the majority of fickle investors have already sold off their holdings, meaning the token is not as easily available anymore. In such a situation, ETH could indeed prove to be a long-term investment, and at the end of the day, scarcity can often drive such a rally of an in-demand asset.
Last but not the least, many traders are currently covering their risky short positions after having been burned, and that could be another major reason behind the continuing Ethereum rally. Investors could keep an eye on the price action in the coming hours.
Featured image: DepositPhotos © Primakov