Ethereum is still in the news, and some analysts are talking about a possible bullish rally in sight. So far, the main argument is that although there has been an explosive increase in the popularity of decentralized finance (DeFi), ETH has remained stable. This is despite the fact that much of DeFi is based on Ethereum.
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Ethereum remains, but DeFi increase in 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. Interestingly, many DeFi tokens are active in the Ethereum block chain, but this has not led to an increase in ETH valuation.
The reason for this phenomenon can be found by reviewing events in 2017. It was in this year when to acquire ICO tokens one had to use Ether compulsorily, and then take them to exchanges to finally access ICO.
However, nowadays for users to enter the DeFi space they don’t necessarily need to acquire ETH to bridge the gap. It is here that we notice that crypto currencies such as USDC and USDT DAI come into play.
But this does not mean that ETH is not used as a base token for these assets. What happens is that it is only used for gas prices, instead of a capital asset. So the natural conclusion is that in the middle of 2020 any kind of price increase for DeFi tokens may not directly trigger demand for Ethereum.
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What could happen for ETH to enter a bullish rally?
So far what has happened is that Ethereum’s price action has been closely related to Bitcoin’s and the cryptographic market added in the last days and weeks.
At the time of writing, Bitcoin Revolution has increased by 0.55% from yesterday. This translates into a valuation of US$ 244. This rise seen today occurs when Bitcoin tries to exceed US$ 9,600.
Ethereum price chart over the last few months, with a slight increase in the last week; and for some it could be the sign of a rally on the way. Source: CoinMarketCap
The Ether-Bitcoin (ETH/BTC) trading pair is rising to levels not seen since late May, showing the strength that ETH is experiencing lately. Currently, 1 ETH equals 0.02528 BTC. So, when a trader is optimistic about ETH relative to Bitcoin, he buys ETH/BTC.
All of this generates a positive feeling in the market, which is a fertile ground for future positive narratives in which assets like ETH thrive.
Even better, Ether is currently performing above the 100-day and 200-day moving averages: a bullish indicator. Along with that strong signal, volume has been increasing lately.
Finally, if ETH breaks the resistance between US$ 245 – US$ 253 or at least reaches it several times, it would probably end in a breakout.