Ethereum Bullish Fundamentals But Cautious Optimism Is Key

Markets bullish

There seems to be a lot more excitement around Ethereum of late. And with the imminent launch of Ethereum 2.0 and DeFi market cap topping $1 billion, it’s not puzzling as to why the excitement is abound.

With the Ethereum price up almost 90% YTD, the narrative is definitely positive with Ethereum and its eco-system.

Ethereum Eco-System Looking Stronger Than Ever

Interest from outside investors is also rising, and many put this down to the popularity of DeFi. Some of the DeFi tokens, such as Aave (LEND) which is up almost 1000% since the start of the year.

And the DeFi space will have a much more long term impact on Ethereum than the ICO space. 

DeFi

According to crypto derivatives analytics firm, Skew, who claim that DeFi running on top of Ether is a “more sustainable” product and market fit than the ICOs of 2017.

And this was seconded by Tradeblock’s John Todaro, who said the excitement and investment in DeFi was especially good for Ethereum.

‘As that outstanding Ether supply comes down and demand from DeFi platforms hits escape velocity, ETH will rally hard,’ said Todaro.

Ethereum 2.0 Will Add More Fuel To Ethereum’s Escape Velocity

The Ethereum 2.0 upgrade, which is expected to launch any time now, will also add more fuel to the excitement surrounding Ethereum.

With Phase 0 we will see the launch of the Beacon chain, which will be the start of Ethereum’s transition onto a proof of stake model.

The Ethereum 2.0 upgrade will be completed in a few phases, and will likely take at least 2-3 years to complete.

And although we won’t reap the scaling benefits until at least the introduction of Phase 1, there is more interest from investors already.

Ethereum

Institutional Interest is Growing

It’s not just 2.0 development or the DeFi space which is looking bullish for Ethereum. Institutional interest through Grayscale’s Ethereum Trust (ETHE) has grown exponentially this last year.

At last count ETHE has $364.2m AUM, up from $11.7m in the last twelve months, most of which has been invested this year alone.

Cautious Optimism Is Always Key

We saw some selling of ETH the previous week before a rebound to today’s price of $248.41, and although the fundamentals look strong, it’s always good to be cautiously optimistic.

And with the bull season apparently upon us, surely Ethereum has to perform big time.

Prominent analyst Ceteris Prominus believes so. In a Tweet thread, he said,

‘If ETH doesn’t go on a significant & idiosyncratic run over the next 6 months then I don’t see how it ever will. – DeFi boon -> profits to ETH – ETHE arb play, consistent spot demand – ETH 2.0 phase 0 – Fees skyrocketing. Everything is lining up. If it doesn’t happen now, when?’

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Conclusion

Ethereum 2.0, DeFi, and much more development is going on in the Ethereum eco-system. There has been a lot of excitement, and even with the lockdown induced price crash, Ethereum has performed very well this year.

But the best is yet to come. Once Ethereum 2.0 does get off the ground, and with DeFi’s almost inevitable continued rise, it’s hard to see how Ethereum won’t perform, price-wise.

It’s important to be cautiously optimistic, but with the interest from institutions ramping up as well, the wind might easily blow that caution away.

Author: Tommy Limpitlaw

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When I came up with Ethereum, my first first thought was, 'Okay, this thing is too good to be true.' As it turned out, the core Ethereum idea was good - fundamentally, completely sound