For the first time since July 2018 the price of Ethereum (ETH) on Binance has reached $500. It is noteworthy that just two days ago the rate of the main altoin fell to $456, and at the beginning of the month ETH traded at $370.
So, in two days Ethereum rose in price by 10%. The bullish pressure on the asset is increasing for two main reasons: firstly, the likely revival of the decentralized finance sector (DeFi), and secondly, the inevitable launch of ETH 2.0.
DeFi recovery and ETH 2.0 launch as major catalysts for the Ethereum rally
During this week, DeFi's leading tokens, such as Yearn.finance (YFI) and Aave, have gone up significantly in both ETH and dollar value.
Following the collapse of the initial DeFi bubble, the recovery of tokens likely strengthened confidence in the outlook for Ethereum and the altcoin market in general.
Moreover, the upcoming launch of the core ETH 2.0 network is attracting investor interest in the core Ethereum platform. The ETH 2.0 deposit contract is due to expire by the end of the month, so the volume of ETH offerings on the stock exchanges is likely to fall.
When the available supply of an asset on exchanges decreases, the pressure from the sellers also weakens.
Investors aren't sure where to invest: BTC, ETH or DeFi?
With the latest market dynamics in mind, investors are gearing up for a prolonged bull market.
Well-known analyst Spencer Noon, head of DTCCapital, noted yesterday that investors are not sure which direction to take - Bitcoin, Ether or DeFi:
Very few investors I talked to are sure which tokens will surpass the bull market dynamics - BTC, ETH or DeFi. I cannot criticize them for investing a third in each of the three assets. This seems reasonable given the current uncertainty.
Be that as it may, the "current uncertainty" may play into the hands of Ethereum, as Bitcoin has appreciated more intensively in recent months. The leading cryptocurrency is already approaching $20,000, and some investors may find the potential of BTC's rally limited until the price reaches its all-time high.
Until this happens, the demand for DeFi and ETH tokens will remain high.