Welcome to the Ethereum Price Preview, an analysis of current and upcoming market events and how they might shape the price of ETH and the trajectory of the network.
The past week has seen strong upward price momentum, and our market analysis indicates that the growth is far from over. Let’s take a look at the factors likely to impact the Ethereum price for the week ahead.
Strong Growth Anticipated With Fundamental All-Time Highs
As predicted in our most recent price preview, the price of ETH has seen a major uptick over the past week. ETH price soared 50% in just a few days following bullish momentum created by strong fundamentals throughout the ecosystem, and those fundamentals appear to be consolidating further.
Glassnode data shows that the amount of gas used in transactions is at an all-time high, as are mining rewards which take into account ETH transaction fees. The rising amount of gas used is a result of both an increase in the quantity of transactions and complexity of transactions (more complex transactions require more gas).
Miners are earning more ETH for mining than ever before, and the news has created a buzz throughout the Ethereum community. Higher mining rewards makes ETH a more desirable coin to mine, and inherently raises the value of the labor it takes to create ETH. To many traders, it seems logical that this value may apply to ETH price in the near-term.
Ethereum network activity is now higher than it was in 2018, and with more traders and greater mining rewards, the blockchain is arguably more sustainable as well.
Last week Ethereum celebrated its 5-year anniversary, and now has a market cap of approximately $43 billion. This is roughly 20% of the Bitcoin market cap, however the volume in which ETH is traded has been 75% that of BTC in the last 24 hours (this includes decentralized exchange volume data from CoinGecko).
With the historic price drop of Black Thursday now fading into the annals of Ethereum history, Ether is perhaps rising to match its “true” value. Many analysts see this rise as being in line with the stunning progress made over the course of the year. ETH is now 340% more valuable than it was during the $88 low reached on March 13.
DeFi Indicators Remain Bullish
The amount of ETH leveraged in Decentralized Finance (DeFi) has continued to break all-time highs and now stands at $4.31 million (3.85% of all ETH in circulation). The traders and investors who leverage ETH in DeFi are intimately familiar with how Ethereum and DeFi work, and this metric is a possible leading indicator of ETH price.
Other experts in the space have also shown their hand in recent days. On July 30, Maker DAI increased the debt ceiling on ETH, indicating that they anticipate more bullish price movement.
The debt ceiling rose from 260 million to 340 million ETH, and has now tripled since June. Maker users typically borrow DAI against ETH, using this DAI to “farm yield” or leverage their ETH position. Demand for leveraging ETH is relatively high, and it’s likely that the market will hit the new debt ceiling within the week amid ever-growing network activity.
The total value locked in DeFi now stands at $4.18 billion, and the collective market caps of DeFi tokens recently crossed $8 billion.
Growth in DeFi has been fuelling ETH network activity for months, and now it appears to be impacting price action as well. A number of Ethereum investors in the space are confident that DeFi is only just getting started, with many promising milestones and developments on the horizon.
Curve exchange will be launching its much-awaited CRV token in early August, with many other tokens now also in development. Yield farming has seen astonishing 1000%+ returns in some cases, and the exponential growth has reminded many traders of the ICO frenzy of 2017 – 2018. However, while the massive gains we’re seeing in yield farming may be unsustainable, the fundamentals behind major DeFi projects appear to be solid.
Unlike most projects which raised funds in the ICO craze, DeFi has a solid use case and many working products already, and the world is starting to notice.
On August 04, PegaSys Protocol product manager Tim Beiko will speak at an Ethereum Developer Alliance Meetup hosted by ConsenSys. The online event is called EIP-1559 and Escalators: Fixing the Ethereum Fee Market, and deals with proposals around the pricing of gas in the Ethereum network, an increasingly relevant topic amid rising gas costs.
Ethereal Summit is hosting an event on August 06 called Gaming on the Decentralized Web. The event features Alex Connolly, CTO of Immutable, the company behind the Gods Unchained video game. Blockade Games CEO Margueritte Decourcelle will also speak at the event, along with Sorare founder Brian O’Hagan. The event will focus on the use of non-fungible tokens (NFTs) in gaming, which allow for the creation of unique in-game items and assets, a major use case for crypto in gaming.
Ethereum Malaysia is hosting an event on August 06 called Community Meetup August 2020: Making Sense of MACI. Minimal Anti-Collusion Infrastructure, or MACI, “enables Ethereum developers to create voting systems where collusion among participants is difficult, while retaining the censorship resistance and correct-execution benefits of smart contracts.” Ethereum Foundation developer Koh Wei Jie, the developer behind MACI, will speak on his creation which has a use case in preventing bribery and corruption in governmental elections.
On August 07, Boulder Blockchain will host its Remote First event. The event is a casual meetup between working and aspiring blockchain developers, and aims to educate developers and build camaraderie and connections in order to facilitate the growth of new projects.
Finally, ETHPlanet will host the EDCON2020 Community Ethereum Development Conference event from August 09 – 11. EDCON2020 is an annual, non-profit, global Ethereum conference organized and supported by many organizations within the space.
Ethereum co-founder Vitalik Buterin will speak at the event, which is being held online due to COVID-19 restrictions. Other speakers include Optimism CTO Karl Floersch, Ethereum Foundation core researcher Hsiao-Wei Wang, and many other researchers and executives attached to Ethereum-related projects.