3 Reasons Ethereum Price Hit 75% To Hit 2-Year High At $ 395

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Over the past two weeks, the price of Ether (ETH) has risen 75% as the price has risen from $ 222 to $ 390. Many investors believe Ether’s momentum is boosting the entire market, and may even push Bitcoin (BTC) higher.

ETH-USD daily chart. Source: TradingView.com

Three factors that seem to be triggering the strong Ether rally are: DeFi, ETH 2.0 and the current extended rally taking place in the altcoin market.

DeFi’s growth is pumping altcoins but there are bearish signs

Since mid-June, the total value blocked in decentralized finance protocols (DeFi) has continued to increase. The launch of protocol-specific tokens, like Compound’s COMPound for example, has led to growing demand for DeFi.

Eventually, users discovered a phenomenon called ‘Yield Farming’, which involves looking for higher yields in the DeFi market and switching between protocols to gain incentives.

The explosive growth of the DeFi market over a short period has led many DeFi connected tokens to rise rapidly. In July, investors apparently sold DeFi tokens and other small-cap altcoins, reverting to Ether and Bitcoin.

Today, the price of Ether hit a 2-year high as it hit $ 395 on BitMEX, but it warned traders of a potential pullback. In fact, crypto-trader Edward Morra said:

“Yeah, the dish coming out of another dish is a sight to see. Also, it is not durable and will correct. If you’re new to this space – buy dips, don’t FOMO at the top. ”

ETH 2.0 boosts Ether momentum

A constant positive factor supporting Ether’s upward momentum is the anticipation of ETH 2.0. In August, the Ethereum developers plan to launch the final ETH 2.0 testnet called Medalla.

When fully launched, ETH 2.0 would phase out miners from the network and reward users for participating in the network. The incentive system would allow users to earn a return on their Ether holdings over a long period of time.

Kelvin Koh, co-founder of venture capitalist Spartan Black, recently suggested that each phase of Ether will make Ethereum stronger. Koh said:

“Each phase of ETH 2.0 over the next 2-3 years brings Ethereum closer to its end state and will be catalysts for ETH.”

The Altcoin season continues

The rally in Ether and Bitcoin over the past three days has coincided with a drop in altcoin prices. In the short term, the cycle of profit taking could continue if altcoins experience regular uptrends.

In previous bull markets, major cryptocurrencies and small altcoins have shown an inverse correlation, meaning that when the price of Bitcoin rose, altcoin values ​​fell.

The opposite is true when the price of Bitcoin is stable or consolidating. This creates a cycle that allows BTC and ETH to benefit from multiple times of profit.

Satoshi Flipper, a popular trader on Twitter, suggested that in the long term there is key resistance for Ether at $ 780.

ETH-USD 1 week chart. Source: Satoshi Flipper

It remains to be seen if the confluence of ETH 2.0, pickups in profit taking and DeFi growth could push the price of Ether towards higher resistance areas. For now, sentiment around altcoin remains generally positive over the medium term.

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