Number Go Up - The Daily Gwei #36
ETH finally stopped being a stablecoin.
So ETH decided to wake up over the last couple of days and is currently sitting at a ~17% return for the week. While it’s impossible to pinpoint exactly what is driving the recent ETH movement, I wanted to give some thoughts around why I think it’s moving up and why I’m not surprised.
The first and most obvious reason is the recent eth2 news. That is, the news that the “official” eth2 phase 0 multi-client testnet will be going live on August 4th (which was announced ~2 days ago). If all goes well with this testnet over the next 2-3 months, a mainnet date will be set (currently expected to be sometime in November). This will be one of the biggest milestones in Ethereum’s history (if not the biggest) as it’s the first critical phase of the rollout of eth2. Believe it or not, people are still sleeping on this!
Outside of eth2, probably the biggest fundamental (and narrative) driver of ETHs value today is the rise of DeFi. Basically for two reasons - people wanting to use ETH as collateral to “yield farm” and people having to use ETH to pay gas fees (which we all know are at record highs). This puts double demand pressure on ETH and lends itself to a healthy feedback loop (more lucrative yield farming opportunities > buy more ETH for collateral/gas). Obviously the ETH paid in gas fees isn’t locked as it goes to miners who could either choose to sell it as they get it or stockpile it. Though, sometime in future, some ETH paid as gas fees will be burnt.
General sentiment has also been in Ethereum’s favor over the last few months due to the growth of DeFi, layer 2 scaling tech coming online, and of course the steady progress of eth2. Because of this, I’ve seen many people that have been generally bearish on ETH over the years start to turn publicly bullish. There’s many other reasons for this too: they’re trying to capitalize on the hype, they bought ETH and want their investment to go up, they don’t want to be “left behind”, they simply changed their mind when presented with new information and so on. Regardless of the reason, this positive sentiment shift does, in some way, contribute the ETHs price rising.
Of course, a piece about the price of ETH wouldn’t be complete without some technical analysis (TA)! I’m not a trader so I don’t tend to do any TA myself but I have a group of friends that do and they’ve been calling for this move up for quite a while. In particular, ETHUSD broke a very important trendline over the last couple of days that stretches all the way back to June/July of 2019 - I’m told that this is somewhat significant.
Source: https://www.tradingview.com/x/3rg8zlln/
I don’t have a crystal ball so I don’t know where ETH goes from here but obviously I am extremely bullish on ETH and Ethereum - I’m also very bullish on some DeFi tokens. In general though, it’s certainly starting to “feel” like the early stages of a bull market - and that’s a little bit scary.
Have a great weekend everyone,
Anthony Sassano
All information presented above is for educational purposes only and should not be taken as investment advice.
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