Last week, astute analysts of the cryptocurrency market noted some interesting developments related to the supply of Ether (ETH) as the London Fork approaches on August 4th.
Current data from KryptoQuant, an on-chain analytics company, suggest that the amount of ether held in the reserves of cryptocurrency exchanges has hit new daily lows since the beginning of July.
To determine if this is a bullish or bearish trend for the big altcoin, let’s take a closer look at some of the factors influencing the increased demand for ether, including The Eth 2.0 deposit agreement, increased activity in decentralized finance, and potential merchant enthusiasm ahead of the Ethereum Enhancement Proposal (EIP) 1559 implementation.
Staking in Eth 2 exceeds 6 million ethers
One source of great demand for the token is the Eth2 deposit agreement, which passed the 6 million ether mark closed on June 30th.
The eth2 deposit contract now includes 6 million ETH.
to???? Anthony Sassano ?? (@ sassa0x) July 1, 2021
The Eth 2 deposit agreement currently contains 6 million ETH.
CryptoQuant data shows July 1st saw the largest one-day Ether withdrawal from exchanges since Jan.
The latest data provided by the Eth2 launchpad shows that the amount currently locked is 6,166,661, suggesting that not all of the ethers withdrawn from the exchanges ended up in the Eth 2 contract.
The DeFi ecosystem is on the rise
Another possible target for Ether being pulled from exchanges is the DeFi ecosystem, where token prices have increased as well as the total value locked in DeFi logs.
While ether and Bitcoin (BTC) makes up a large part of the value currently locked in DeFi, their prices have been relatively the same for the past week, which means the recent July 8th surge in TVL may have been caused by the rise in the price of the tokens as the deposits are according to the data of . remained stable Deposits and Loans provided by Dune Analytics.
The excitement of the traders grows in front of the London fork
A third driving force behind Ether’s behavior is the upcoming London fork and proposal EIP-1559.
Several analysts expect the upgrade to have a positive impact on the price of Ether due to the move to a more environmentally friendly proof-of-stake consensus mechanism as well as a new “scarcity” feature that will reduce the supply of tokens in traffic.
The excitement about the upcoming fork is a possible source of the ETH / BTC surge since June 27th as the price of ether has also risen at the level of the US dollar.
While Ether has outperformed Bticoin since June 27, BTC’s behavior during the July 8th market-wide pullback is further evidence of why it remains the most resilient of all cryptocurrencies when market conditions are not so favorable.
However, from a long-term perspective, Ether’s value proposition cannot be ignored and the battle with BTC is far from over, as discussed recently in a Goldman Sachs report suggesting that Ether may capitalize the Bitcoin market in the next few Years will exceed a few years.
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