In a spectacular rally that has outshone the bigger bitcoin, cryptocurrency ether broke past $4000 to set a new record high, with investors betting that ether would be of even greater use in a decentralized future financial system.
Here are a list of potential reasons according to Spencer Noon on why ETH is skyrocketing and how it will hit the $10k mark.
- ETH earned the most money from network fees than any other cryptocurrency, like Bitcoin.Given the network’s consistently high transaction costs, growth in fee revenue is unsurprising.
- Second, Ethereum settles $30.5 billion in daily value, much more than Bitcoin and every other block chain to put this in perspective, PayPal settles $2.5 billion daily.
- Decentralised finance, or “DeFi”, which refers to transactions that take place outside of conventional banking and for which the ethereum blockchain serves as a critical forum, has huge reliance on the Ethereum network.
- Then there’s the issue of stablecoins’ inexhaustible supply. Ethereum currently has over $50 billion in outstanding stablecoin stock, with 500 thousand daily unique senders. Furthermore, every day, “$20 billion in value is exchanged as a symbol of explosive product-market fit.
- The sixth explanation had to do with DeFi’s liquidity, as DEX volumes have been soaring all over the place. Noon discovered that monthly DEX volume was over $60 billion, up 60 times year on year, “proving DeFi liquidity already rivals #CeFi.” It’s worth remembering that a recent Pantera Capital discovery discovered something similar.
- There has been a related increase in Ethereum’s active wallets, with the regular active address count recently rising to 625K (90-day MA) – well above the coin’s previous high point on the charts.
- The advent of Ethereum as a “economic void for all properties, including Bitcoin,” it could be argued, is also making it more appealing. The fact that “over 200K BTC are now depicted on Ethereum in various ways” exemplifies this.
There are other variables as well, all of which could lead to ETH’s eventual rise to $10,000. For instance, NFTs, maybe the space’s hottest property this year, have surpassed $600 million in sales on Ethereum. The rise and popularity of projects like the Ethereum-based Polygon network have also debunked the “Ethereum can’t scale” myth. Finally, the hype and progress around EIP-1559 may be the most important factor driving ETH’s value. Noon claims that,
Finally, in less than 3 months(!), the EIP-1559 upgrade will be activated, likely resulting in hundreds of millions worth of ETH being burned each year — this is a massive catalyst for ETH value capture and its overall fundamental investment case.