Since the beginning of 2021, ETH has been surging up strongly and is up 150%, causing its market capitalization to soar above $200 billion. But will Ethereum go up to set new records this year, or will the rally run out of breath soon?
Here are several fundamental metrics to support the bullish scenario for Ethereum:
Apart from Ethereum rallying into record highs, its transaction fees also skyrocketed to new highs ($25m daily avg), leaving many traders speechless.
However, high transaction fees may suggest an increased demand on the network, and people’s willingness to pay high gas fees may be a sign of high utility. This also implies bullishness for miners and those planning to hodl ETH in the long term.
For institutional investors Ethereum is emerging as an alternative to Bitcoin, with their interest being at levels never seen before. However, the data from Intotheblock shows that the number of large ETH transactions (>$100k) is notably smaller than during its 2018 ATHs meaning that whales and institutions still haven’t entered the big game.
- Hash rate
With the increase of the network’s difficulty, the ETH hash rate has also grown to an all-time high level. It can suggest that miners have never been more confident in Eth, which is a positive sign for the robustness of the network and the price action of Ethereum in the coming months.
Ethereum’s DeFi sector, which initially exploded in 2020, is set to become even more important in 2021. There are now more than 1.42M DeFi users, which is a sign that Ethereum’s biggest use case is on a path towards product-market fit. Also, there is now more than $41 billion locked in DeFi – a sign that the ecosystem is maturing rapidly and becoming institutional-grade.
- Exchange Flow
ETH is steadily flowing out of exchanges, a telltale sign that it has entered an accumulation phase. This process technically reduces the number of tokens available to sell, consequently capping its downside potential. The declining Ether supply on cryptocurrency exchanges is a positive sign for this altcoin’s future price growth.
- Developers activity
Ever since the inception of the ETH back in 2014, its developments have been consistently increasing. Aside from keeping the current state of the network healthy and helping with further adoption, it serves as an indicator that new and better use cases are coming, which will increase demand for the native asset.
For now, Ethereum has clearly outperformed Bitcoin in 2021, and with ETH 2.0 on its way, there is no telling where the coin’s potential ends. Although most forecasts look rather bullish, cryptocurrencies remain as volatile as always and whether or not Ethereum will reach 10K has yet to be seen. Crypto bull markets are known for their quick corrections, and even if ETH is set to hit fresh record highs sometime soon, we should still get ourselves prepared for a bumpy ride.
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