Ethereum

Top 3 Reasons Why Ethereum Price is Set to Blow Up !

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ETH is still stuck in a range, as it has been for the better half of August. Despite the high volatility, the cryptocurrency has been trading in a horizontal range of 3,000 to 3,380

Although the price action has not been impressive the fundamentals still remain strong. Popular Analyst Aaron Arnold made a bullish case for ETH based on its fundamentals.

Supply Shock

Arnold in a recent YouTube video says that Ethereum is experiencing a supply shock as a result of the EIP-1559 update. It  permanently eliminates a specific amount of ETH from the circulating supply each time a transaction is executed.

He says as Ethereum changed its monetary policy, an enormous quantity of ETH is being burned. Over 100,000 ETH, owing to NFTs platform, DEXs (decentralised exchanges), DeFi (decentralised finance), play-to-earn [games], and stablecoins.” has been burnt.

Since the update went live earlier this month, Ethereum tracking service Etherchain shows that over 125,923 ETH had been burned. 

The Ethereum block space is getting used and because Ethereum changed its monetary policy, an insane amount of ETH is getting burnt, over 100,000 ETH due to NFTs platform, DEXs (decentralized exchanges), DeFi (decentralized finance), play-to-earn [games], stablecoins.”

Low Annual Inflation

Arnold is also positive about Ethereum because of its low yearly inflation rate.

He notes that for the first time, Ethereum’s daily issuance was lower than Bitcoin’s for the first time. Hence, ETH’s annualised net inflation was 1.1 percent, while Bitcoin’s annualised net inflation was 1.75 percent.”

Total Value Locked

The next reason is the increase of total value locked (TVL) in decentralised finance (DeFi) platforms. The amount of capital locked up in DeFi, according to him puts Ethereum in a position to compete with the world’s major institutions.

He points that, On January 1st, the beginning of the year, total value locked was  $16 billion. However, today, that number is a whopping $85 billion. This would place ETH as the 20th largest bank in the world by market cap.

Further, he says that smart contracts hold roughly a quarter of Ethereum’s total supply.

“….the amount of Ether placed in smart contracts has similarly gone to all-time highs. In fact, an unbelievable 26% of all ETH is in smart contracts at the moment. We can only expect this trend to continue.”

https://www.youtube.com/channel/UCbLhGKVY-bJPcawebgtNfbw

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Disclaimer : The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of Coinpedia. Every investment and trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

Delma Wilson

Delma is a B2B Content Marketer, Consultant, Blogger in the field of Blockchain, and Cryptocurrency. In her spare time, she loves to blog, play badminton and watch out ted talks. She likes pets and shares her free time with NGO.

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