There are three reasons behind the Ethereum price explosion, such as the rapid growth of Decentralized Finance (DeFi) projects, for example.
In addition, the ‘hype’ surrounding ETH after CME futures listing and the reduction in cryptocurrency offerings, such as BTC and ETH, on exchanges, contributed to the growth in cryptocurrency prices.
CME does institutional advertising with the listing of ETH futures
The price of Ethereum (ETH) reached US $ 2 thousand for the first time on the market shortly after launch of future CME ETH, in early February 2021, aimed at institutional investors.
Before the listing, there was speculation that CME could cause the price of Ethereum to fall significantly on the market, just as it did with Bitcoin. CME announced the listing of Bitcoin futures in late 2017, coinciding with the BTC price top at that time.
However, ETH has shown an important appreciation, breaking price records, in addition to surpassing the important mark of US $ 2 thousand this Saturday (20).
The new price record indicates that there is currently a great deal of institutional demand for ETH, as is the case with the Grayscale Ethereum Trust fund, which resumed buying the cryptocurrency in February 2021.
Explosive growth of DeFi projects
According to data from Dappradar.com, the Total Blocked Value (TVL) of the market in DeFi projects corresponds to almost US $ 50 billion today.
The term TVL is used to measure the amount of capital that is blocked in each DeFi protocol. For example, if $ 2 billion is being used in a loan protocol to borrow or lend money, it would mean that the protocol’s TVL would be $ 2 billion.
Ethereum directly benefits from the high TVL of the DeFi market because ETH is used as a means of paying transaction fees on the altcoin blockchain network.
Therefore, the greater the demand for DeFi protocols and services, the more this can benefit the value of ETH in the market.
BTC and ETH reserves continue to fall on exchanges
Meanwhile, the Bitcoin price shows no signs of slowing, as it has exceeded $ 57,000 and is holding solid support in the $ 50,000 area.
One reason for this is the amount of BTC and ETH supply that is decreasing on exchanges, which reduces the selling pressure in the market.
Furthermore, as long as the Bitcoin price continues to show resistance above $ 50,000, ETH’s strong momentum is likely to be sustained in the foreseeable future.
According to Santiment analysts, there is also significant interest in Ethereum among the cryptocurrency market community. When the price of ETH exceeded $ 2,000, 33% of all discussions about cryptocurrencies were directed at the rise in ETH. They wrote:
“Well, Ethereum went up more than $ 2,000 and it happened quickly, as prices went up to $ 2,041 in just an hour after our article was published! Address activity reached levels of up to a month. And 33% of all the #crypto discussions were related to the price of ETH while the story was being made. “