The second-largest cryptocurrency network Ethereum has recorded 85% gains in 2020 so far as it trades at $243.
However, this might not be it for Ether and we may record more gains ahead given the number of factors fueling Ethereum growth.
“If ETH doesn't go on a significant & idiosyncratic run over the next 6 months then I don't see how it ever will,” said analyst Ceteris Paribus.
Increasing Gas Usage & Skyrocketing Fees
The network usage is already hitting new highs with blocks getting increasingly full over the last full weeks. To address this increase in block fullness, Ethereum miners have voted to increase the network's gas limit by 25%.
Network fees are also skyrocketing, in 2020 so far, the total network fees have jumped 848%.
Over the last two weeks, ETH actually flipped BTC in terms of daily transaction fees, the last time ETH fees topped BTC fees for at least 14 consecutive days was in July 2018. But ETH median fees between $0.47 and $0.65 are still lower than BTC’s which remains between $1 and $1.50.
Dollar milkshake theory in action on Ethereum.
Stablecoin flows have pushed on-chain fees above Bitcoin's. More proof that crypto as a technology is innovating across the capital markets stack. pic.twitter.com/R0YOrdeyaA
— Max Bronstein (@max_bronstein) June 22, 2020
Moreover, stablecoins are exploding and the majority of them are launched on Ethereum blockchain. Stablecoin issuance which is plugged to consumer demand has grown immensely in 2020 during the coronavirus pandemic just as the demand for USD has risen globally.
The growing DeFi space is one of the bullish catalysts for Ether. Just recently, the total value locked in DeFi space jumped to a new high of $1.50 billion. The amount of ETH locked in DeFi has also jumped back to 3 million.
That is 4x larger than new daily $ETH issuance from inflation
— Spencer Noon (@spencernoon) June 22, 2020
“As that outstanding ether supply comes down and demand from DeFi platforms hits escape velocity, ETH will rally hard,” is what John Todaro, head of research at TradeBlock believes.
Just last week COMP token prices skyrocketed which pushed the market cap of DeFi past $6 billion. When these tokens start crashing down, Ether and BTC are expected to pump.
Ethereum is about to break out of its freshman bear market, like Bitcoin did 9 years ago.
Positive market sentiment is fertile soil for the future promise narratives that story assets like ETH thrive in.
The recent DeFi bull market will implode shortly and feed into ETH. pic.twitter.com/7UrV2uznXN
— light (@LightCrypto) June 22, 2020
DeFi boon is expected by many experts to result in profits to Ethereum.
The One Way Street of ETHE
Another immediate bullish catalyst is ETHE shares unlocking. The lockup period for the first batch of Grayscale ETHE shares has ended, with sellers bringing the premium down. Already it has declined by 44%. This is pushing some investors to buy spots to reissue shares.
“Float unlocking will depress premium, but if premium stays high, arb funds will dump ETHE on secondary and re-enter at NAV with new spot ETH,” Paribus said.
The reason why ETHE is a “meaningful driver” for Ethereum is that most deposits to this Grayscale product are borrows.
Avi Felman, head of trading at BlockTower explained that funds are borrowers of ETH placing the crypto asset into ETHE to create ETHE shares while lenders are long-term trying to get yield.
“Normally borrows are “created supply” as people borrowing usually short. In this case, there is no created supply as it gets locked in the trust instead of sold on the market,” he said.
Borrowers are still short ETH, a risk which gets shifted to ETHE products but they were locked down so when a sizable amount of ETH unlocked, it resulted in ETH prices shooting up.
The consistent spot demand and the arbitrage on ETHE will lead ETH further higher.
I'm starting to think ETHE is the most bullish event for ETH because it's a one way street.
— Qiao Wang (@QWQiao) June 22, 2020
All the Bullishness
ETH 2.0 Staking is already garnering much attention with wallets with the required Ether for staking, 32 ETH, growing, and ready for staking.
Big names among the crypto exchanges, Binance and Huobi are already backing Consensys to test its new staking as a service offering for Ethereum 2.0.
It's not even people with <32 eth that'll use exchanges. Most people are lazy and will just keep on coinbase, kraken, binance, etc rather than mess around themselves.
Ethereum is 11x the cap of tezos, and inflation rate will be higher in the beginning. Exchanges salivating.
— Ceteris Paribus (@ceterispar1bus) May 4, 2020
The layer 2 scaling solutions also add to all the Ethereum bullishness with the fundamental structural shifts in the form of ETH 2.0 and EIP 1559 further creating “a strong bid” for Ethereum and a nice bonus down the line for Ethere prices.
As analyst Paribus said, “Everything is lining up. If it doesn't happen now, when?”