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3 reasons why the Ethereum price rose 75% and hit the 2-year high of $ 400

In the past two weeks The price of ether (ETH) rose 75% as the price rose from $ 222 to $ 400. Many investors believe that ether dynamics are driving the entire market and may even drive Bitcoin (BTC) up.

ETH-USD daily chart. Source: TradingView.com

ETH-USD pair daily chart. Source: TradingView.com

3 reasons why the Ethereum price rose 75% and hit the 2-year high of $ 400
3 reasons why the Ethereum price rose 75% and hit the 2-year high of $ 400

Three factors that trigger the strong recovery of ether are: DeFi, ETH 2.0 and the ongoing recovery in the Altcoin market.

DeFi growth is pumping old coins, but there are bearish signs

Since mid June The total value insured in the decentralized financial protocols (DeFi) has risen continuously. The introduction of protocol-specific tokens, such as Compounds COMP, led to a growing demand for DeFi.

Eventually, users discovered a phenomenon called “yield farming”. It’s about users looking for higher returns in the DeFi market and switching from one protocol to another to get incentives.

The explosive growth of the DeFi market in a short period of time caused many tokens associated with DeFi to grow rapidly. In July, investors appeared to sell DeFi tokens and other low-capitalization alternative currencies and turned to Ether and Bitcoin.

August 1st The ether price peaked at 2 years when it climbed to $ 395 on BitMEX. However, this warns retailers of a possible withdrawal. Indeed, cryptocurrency trader Edward Morra said::

“Yes, the parable that emerges from another parable is an unforgettable sight. This is also unsustainable and will correct it. If you are new to this area, buy the waterfalls, not FOMO at the top. “

ETH 2.0 amplifies the dynamics of ether

A constant positive factor that supports the upward dynamic of ether is the expectation of ETH 2.0. In August, the developers of Ethereum hope to launch the final test network of ETH 2.0 called Medal.

If published fully, ETH 2.0 would exclude miners from the network and reward users for participating in the network. The incentive system would allow users to return on their ether stocks over a long period of time.

“Each phase of ETH 2.0 over the next 2-3 years brings Ethereum closer to its final state and will be a catalyst for ETH.”

The Altcoins season continues

The recovery of ether and bitcoin in the past three days coincided with a drop in altcoin prices. In the short term, the profit-taking cycle could continue if altcoins saw a regular upward trend.

In previous bull markets Major cryptocurrencies and small alternative currencies showed a reverse correlation, which means that as the price of Bitcoin rose, alternative currency values ​​fell.

The opposite is still the case when the Bitcoin price is stable or consolidating.. This creates a cycle in which BTC and ETH benefit from multiple manifestations of profit taking.

Satoshi Flipper, a popular trader on Twitter, suggested that there is crucial resistance for ether at $ 780 in the long run.

ETH-USD 1 week chart. Source: Satoshi Flipper

1-week chart of the ETH-USD pair. Source: Satoshi pinball machine

It remains to be seen whether the confluence of ETH 2.0, profit-taking and the growth of DeFi could push the price of ether into areas of higher resistance. The mood for altcoins remains generally positive in the medium term.

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