Ethereum continues to be in the news, and some analysts speak of a possible bullish rally in sight. So far, the main argument is that even though there has been an explosive rise in the popularity of decentralized finance (DeFi), ETH has remained stable. This despite the fact that much of DeFi is based on Ethereum.
Ethereum remains, but DeFi increases its price
DeFi technology is promising and the market is beginning to reflect this as many DeFi based tokens have had strong capital injections this year. The funny thing is that a lot of DeFi tokens have their activity on the Ethereum blockchain, but this has not implied an increase in ETH valuation.
The reason for this phenomenon can be found by reviewing events from 2017. It was in this year when to acquire ICO tokens you had to use Ether obligatorily, and then take them to exchanges to finally access ICO.
However, currently for users to enter the DeFi space they do not necessarily need to purchase ETH to bridge. This is when we notice that cryptocurrencies like USDC and USDT DAI come into play.
But this does not mean that ETH is not used as the base token of these assets. What happens is that it is only used for gas prices, instead of a capital asset. Thus, the natural conclusion is that in the middle of 2020 any type of price increase for DeFi tokens may not directly trigger demand for Ethereum.
What could happen for ETH to enter a bullish rally?
So far what has happened is that Ethereum price action has remained closely related to that of Bitcoin and the aggregate crypto market in recent days and weeks.
At the time of writing, Ethereum has increased 0.55% from yesterday. This translates to a valuation of $ 244. This rise seen today occurs when Bitcoin tries to exceed $ 9,600.
The Ether-Bitcoin (ETH / BTC) trading pair is rising to levels not seen since the end of May, showing the strength ETH is experiencing lately. Right now, 1 ETH equals 0.02528 BTC. Thus, when a trader is optimistic about Ether regarding Bitcoin, he buys ETH / BTC.
All this generates positive sentiment in the market, which constitutes fertile ground for future positive narratives in which assets like ETH prosper.
What’s better, Ether is currently acting above the 100-day and 200-day moving averages – a bullish indicator. Along with that strong signal, the volume has been increasing lately.
Finally, if ETH breaks through the resistance between $ 245 – $ 253 or at least hits it multiple times, it would likely end in an upside breakout.
Others are of the opinion that the recent bull market DeFi will explode shortly and fuel Ethereum, sparking a rally. It has even been said that this could spark an historic Ethereum bull run that would break its multi-year cycle.
However, the argument for which we could opt is that the prolonged consolidation of Bitcoin can introduce volatility in its price; And since ETH varies in tune with BTC, it could also influence a rise in this cryptocurrency.