Ethereum price surged to an all-time high of $4,370 as the spectacular rally gained steam. Ether has gained by more than 400% this year, pushing its total market capitalization to more than $500 billion. Only ten global companies have a bigger market cap.
User adoption growing
Ethereum is a blockchain project that was created in 2013 by a team led by Vitalik Buterin. Unlike Bitcoin, Ethereum’s goal was not to disrupt the payments industry or fiat currencies. Instead, Ethereum is a network that helps developers build decentralized applications (DAPPs). At the time of launch, the network was based on the proof-of-work consensus. This started to change in 2020 when the developers launched the so-called ETH 2.0.
Ethereum price has rallied recently because of the strong user adoption among developers. The most popular use case for the network is in the Decentralized Finance (DeFi) industry. This is a massive and fast-growing industry that is disrupting the financial industry.
For starters, DeFi is a borderless industry that helps people offer decentralized solutions globally. For example, projects like Uniswap helps people swap their ERC tokens using a decentralized platform. This is different from platforms like Binance and Coinbase that have a centralized structure. Similarly, projects like Aave and Maker help people to invest and borrow money through blockchain technology.
While many projects allow people to build these apps, Ethereum has a strong market share. Indeed, all the biggest DeFi projects are built using this network. The second biggest contender is Polkadot, which was created by a co-founder of Ethereum.
The total value locked (TVL) of DeFi has grown from almost zero in 2018 to more than $88 billion today. This growth will likely continue as more people becomes aware of the network.
Meanwhile, Ethereum price has also rallied because of the ongoing growth of non-fungible tokens (NFT). This is a relatively new industry that enables people to sell their digital products online. Most of the popular NFT platforms are built using Ethereum’s blockchain. Therefore, many analysts believe that the opportunities of Ethereum are limitless.
Institutional demand rising
Many institutional investors have started to shift some of their treasuries into cryptocurrencies. Tesla and MicroStrategy are the best-known holders of Bitcoin. In the ongoing earnings season, several companies like Twitter and Palantir Technologies have said that they will consider investing in cryptocurrencies.
While most companies have invested in cryptocurrencies through Bitcoin, there is a possibility that many will start investing in Ether. For one, it is the second-biggest digital currency in the world after BTC. Indeed, this trend is happening. For example, the Grayscale Ethereum Trust has seen its assets under management (AUM) have grown to more than $125 billion. This will likely continue as the SEC considers an ETF proposed by VanEck.
Meanwhile, Ethereum price held steady after the strong US inflation numbers today. This is partly because investors expect that the current inflation is temporary.
Ethereum price technical analysis
On the four-hour chart, we see that the ETH/USD has continued to hold steady today. The price remains above the short and 25-day and 50-day exponential moving averages. It is also slightly below the upper side of the ascending channel. Meanwhile, the Relative Strength Index is hovering near the overbought level of 70. Therefore, Ether will likely keep rising as bulls target the upper side of the channel and the psychological level of $4,500.
ETH/USD 4-hour chart
Meanwhile, on the daily chart, the pair has risen in the past six consecutive days. This has pushed oscillators to significant highs. The RSI has jumped to the highest level since January while the fast and slow lines of the MACD have moved to the highest level this year. Similarly, the two lines of the Stochastic oscillator are at the highest level this year. Therefore, while the trend remains bullish, a short pullback can’t be ruled out in the longer term.
ETH/USD daily chart