The price of Ether (ETH) rises above $ 2,000 with strong momentum, while it has gained some ground in Bitcoin (BTC) in the past 24 hours.
There are three main reasons for Ether’s explosive rally, namely the rapid growth of DeFi, the hype surrounding ETH after the CME futures listing, and the falling amount of BTC and ETH on the exchanges.
ETH / USDT 4-hour price chart (Binance). Source: TradingView.com
CME futures with institutional hype
Following the introduction of the CME ETH futures earlier this month, which are primarily aimed at institutional investors, Ether hits $ 2,000 for the first time.
Prior to the listing, there was a popular illustration that the CME listing would cause the price of ETH to drop significantly as the 2017 CME Bitcoin futures listing coincided with the local BTC spike at that time.
However, since then, ETH has continuously recovered, surpassing its all-time high, exceeding $ 2,000 on February 20. The new milestone shows that there is currently considerable institutional hype surrounding ETH, which is also evidenced by Grayscale’s resumption of the purchase of ETH by the Ethereum Trust in February.
DeFi is growing explosively
According to data from Dappradar.com, the total value of the DeFi Market (TVL) is nearly $ 50 billion.
Defi total value blocked. Source: Dappradar
The term TVL is used to measure the amount of capital that is included in any DeFi protocol. For example, if $ 2 billion was used on a credit log to borrow or borrow money, it would mean that the TVL of the log is $ 2 billion.
ETH benefits directly from the high TVL of the DeFi market, as ETH is used as a means of payment for transaction fees in the Ethereum blockchain network.
The higher the demand for DeFi protocols and services, the more it benefits from the value of ETH in the market.
BTC and ETH reserves continue to fall on the exchanges
Meanwhile, Bitcoin’s price is showing no signs of slowing as it topped $ 57,000 and holds the $ 50,000 area as a solid support level. One reason for this is the decreasing amount of BTC and ETH available on the exchanges, which is reducing the pressure to sell.
ETH exchange rate reserve (red) vs. ETH price (black). Source: CryptoQuant
As long as the price of Bitcoin remains resilient above $ 50,000, ETH’s strong momentum is likely to continue for the foreseeable future.
According to analysts at Santiment, there is also considerable interest in Ethereum in the crypto community. When the price of ETH exceeded $ 2,000, 33% of all crypto discussions related to ETH. They write:
“Well, #Ethereum over $ 2,000 was going fast as prices jumped to $ 2,041 just an hour after our article was published! Address activity is high for up to a month. And 33% of all #crypto discussions were related history was written on ETH. “
If the momentum of the dominant cryptocurrency in Bitcoin is maintained and investors continue to pull ETH off the exchanges, the likelihood that Ether will continue its rally beyond the $ 2,000 level will likely increase.
