- Ethereum breached past $480 and closed at $475, a new 2020 high
- The 2nd largest cryptocurrency benefited greatly from decentralized finance
- Analysts are pointing to $500 levels soon
Ethereum breached past $480 Monday, further increasing its gains since the start of the year at 270% and 341% since the March 12 crash. The value appreciation has solidified Ethereum’s status as one of the crypto maket’s top gainers for dwarfing Bitcoin’s price upside, which is currently at 65% since January.
Analysts point to the growth of decentralized finance (DeFi) as Ethereum’s top value driver. Majority of the most popular DeFi networks today are built on Ethereum. For example, the governance token YFI increased to as much as $38,682 on Aug. 31 when it was just priced at $31.65 on July 18. Tokens like YF Link increased to $1,494 in just thirteen days from $11.91 on Aug. 18.
The meteoric rise of these DeFi tokens can be visualized in the metric “Total Value Locked,” the amount of money currently on DeFi products, which now stands at $9.59 billion, according to DeFi Pulse.
DeFi contributed to the status of Ethereum as the network to build decentralized finance vs. building that on competitors. According to Josh Olszewicz, market analyst at Brave New Coin, the current boom and its benefit to Ethereum can be compared to what happened in 2017, when the Initial Coin Offering (ICO) craze pushed Ethereum’s price considerably, peaking at $1,448 on Jan. 13, 2018, Olszewiz told Forbes.
The two activities have one thing in common: a trader or investor needed Ethereum to get access to the DeFi tokens or ICO tokens. While it is true that there are other methods to access DeFi, reality is that the ETH – DeFi Token trading pair remains the most liquid of all the trading pairs. This makes the 2nd largest cryptocurrency to still be the top choice when buying DeFi tokens. Conversely, ETH is also the top choice when DeFi token investors decide to take profits — by selling it in exchange for ETH, which would then boost ETH’s price.
With Ethereum closing the day at $475, traders look to further upside at the price of the cryptocurrency, with some analysts calling for a revisit to $500 soon. At this point, the 2nd largest cryptocurrency has already breached past its 2020 high and exceeding the $500 mark would be a level it has not visited since July 2018.