The Ethereum price is tapering but nonetheless steady against both BTC and USD. This comes as ETH collateral in DeFi dApps spikes to record levels.
The Ethereum price is on a tear, literally dismissing doubters. The burst to the top is behind a slew of solid fundamentals that, unfortunately, builds more support for the project’s prospects. There is DeFi. It is Ethereum’s totem and largely attributed to the ETH price pump.
According to Defi Pulse, a site that tracks the number of ETH locked by different DeFi dApps, over $6 billion worth of ETH is locked as collateral. This is 5X the amount when DeFi began gathering pace in early February when ETH soared to around $288. The demand for ETH is fanned by several factors.
Proof of stake and Eth prices playing a role in security
First, some supporters argue for higher—or better prices, once Eth2 rolls out.
Because of Proof-of-Stake and validators required to stake their holdings to secure the network from bad actors, the Ethereum price must retain higher prices.
And the path towards Eth2.0 is on track following the successful activation of the Medalla Multi-client testnet—the last in a series of rigorous test networks before the launch of the Beacon Chain mainnet in the next few months.
The activation time remains tentative but will be likely in November or early next year.
DeFi diversification and UniSwap
The second is the level of diversification DeFi offers. Despite the Bitcoin price expanding, a record number of coins are now tokenized in Ethereum for DeFi.
The chance presented by DeFi through yield farming is what feeds Ethereum bulls further helping pump the Ethereum price.
Furthermore, Uniswap—a popular DEX where ETH is paid as fees—not individual DEX token, is gaining traction. Projects are beginning to list directly on Uniswap. The more popular it is, the better it gets for ETH demand.
Ethereum price analysis
The Ethereum price is trading at $422, adding roughly eight percent against both the USD and BTC.
Bullish, the path of least resistance is upwards. From the daily chart, not only did prices break above the bull flag but behind the upswing was a swell in trading volumes. This uptick pushed ETH prices back above $400 as buyers cemented their position.
Given the FOMO, every low should be a buying opportunity. However, the failure of buyers to follow through on the end of last week’s gains as the Ethereum price shrinks back below $400 could signal a top. $400 is an important psychological support level and any breach to the downside may trigger profit-taking, sparking dumps.
On the flip side, a simple retest to the support trend line—of the bull flag—and within Aug 13 trade range, and a swing higher in trend continuation may see ETH prices printing new 2020 highs in days ahead.
Chart courtesy of Trading View
Disclaimer: Views and opinions expressed are those of the author. This is not investment advice. Do your research.