JAIPUR (Coinchapter.com) – Ethereum’s native token Ether (ETH) broke out of its sideways trend to rally higher by 10% in the last 24 hours, supported by a surge of activity in DeFi, NFT markets, and positive on-chain developments.
Related: Ethereum reclaims $3.35K as ETH supply squeeze continues
For DeFi, the TVL (total value locked) figures of protocols (on Ethereum) approached the $100 billion mark.
NFTs, too, experienced a notable jump in sales. Monthly direct sales for all non-fungible tokens topped $131 billion in August, growing 84% from the low $21 billion figure logged during June. The accumulated NFT market approached sales numbers seen during May when the hype was at its prime.
And bulls assessed the said scenario to place long bids on the ETH/USD pair, pushing prices from $3,190 to the local high at $3,535 on Wednesday. Analysts welcomed the move doubling down on their bullish biases for the world’s second-largest cryptocurrency.
“First $ETH breaks out Then other Altcoins will #Crypto #Ethereum”
said Twitter-based cryptocurrency trader & analyst Rekt Capital
“If $BTC drops, but $ETH stays strong we could see a repeat of 2018. We haven’t seen this inverse relationship in a while but it could lead to a very nice alt run as $BTC bleeds/chops.”
noted crypto educator and market analyst Income Sharks
DeFi ecosystems boomed across not just Ethereum but multiple smart-contract supporting blockchain platforms. Messari researcher Ryan Watkins observed this in a recent tweet.
But with 208 protocols currently being hosted on Ethereum, the public blockchain still holds the pole position as far as adoption is concerned. Data per Coingecko points at a 31.4% DeFi: ETH ratio, with decentralized exchange (DEX) Uniswap commanding a 12.1% dominance in overall DeFi protocol usage.
Ethereum’s Layer-2 scaling solutions, particularly Polygon (MATIC), attracted exponential attention and funds from developers and users. Data from Defi Llama shows that the chain is the 4th largest in terms of TVL and the number of protocols hosted, including AAVE and SushiSwap.
Related: MATIC mooning towards record highs as Polygon furthers entry into DeFi space
The DeFi trend’s leg up indicates a general ETH demand appreciation, but several other on-chain factors hint at bullish headwinds for Ethereum’s native cryptocurrency.
As per Glassnode, 70% of the total ETH supply has remained dormant for the last three months. The Zug-based cryptocurrency market insights provider pointed out that “old-coin supply” began in March this year. It indicates an increasing propensity amongst investors to “buy and hold throughout this bull market.”
Ether’s “liveliness” indicator corroborates the increased accumulation sentiment, according to Glassnode. Distribution took a backseat, and while NFTs contribute to the bulk of transactions within Ethereum, the number of ETH tokens being spent belongs from the “accumulation stashes.” In detail, “coin maturity” has gone up, and spending has gone down.
Plus, the ETH/USD pair’s recent ascent led to a bump in the total count of non-zero Ethereum addresses. As a result, addresses with non-zero balances reached a new all-time high of 6.07 million.
Many ETH tokens moved out of exchanges hinting at the cryptocurrency’s potential run towards $4,000. An uptick in exchange withdrawals rate shows investors’ aversion to selling and instead hold for the long haul.
Related: Ethereum (ETH) looks poised to blast towards $4K; three reasons why
As more addresses hold, the liquidity on exchanges dries up. As a result, the supply/demand balance gets skewed, resulting in a price pump in the context of a supply squeeze.
Another factor leading to ETH/USD’s rally to $4,000 is the rising value of ETH 2.0 deposit contracts.
Glassnode observes that the amount of Ether locked in these contracts grew significantly, thereby putting a good portion of ETH out of active supply, insinuating a rise in prices due to diminishing supply.
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