Ethereum breaks ATH
At this point, it doesn’t seem to be a big surprise that Ethereum broke its ATH. After all, its price has been increasing consistently in recent months and especially since the beginning of 2021.
Looking at the charts, ETH’s growth is nothing short of impressive. On January 1, the cryptocurrency opened the year with a price of around $ 740, meaning that it almost doubled in value, registering a surprising 93% increase.
ETH / USD. Source: TradingView
Of course, the milestone did not come without some serious sales and obstacles along the way. On January 10 and 11, the cryptocurrency went down from a high of $ 1,352 to a low of $ 937 – a reduction in value of about 30%. Those who managed to keep their coins, however, were generously rewarded, as the cryptocurrency has since escalated to its current highest values.
What caused the ETH outbreak?
There are many reasons why Ethereum is on the rise, and the momentum seems likely to continue in 2021. Number one, and perhaps the most important reason of all, is the field of decentralized finance. DeFi is growing. The total amount blocked in various protocols is about $ 25 billion – an an increase of about 4,500% since April last year.
But that is just the tip of the iceberg. We saw the creation of a vibrant ecosystem with thousands of protocols with their own native cryptocurrencies. The vast majority of them work on the Ethereum network, increasing demand for ETH. This also highlighted some of the blockchain’s problems, however, as transaction fees have become so high that many have claimed that DeFi is only worthwhile for larger investors.
This brings us to point number two – Ethereum 2.0 – the solution for the very high fees and the blocked network. With Ethereum 2.0, the network will migrate to a Proof of Stake (PoS) consensus algorithm and Phase 0 was officially launched in December. This was a major milestone and, although it could take a few more years before the launch of the improved network, it certainly contributed to the price of ETH.
The general bullish sentiment in the market is also remarkable. The entire cryptocurrency market has soared, crossing the $ 1 trillion mark for the first time in history a week ago.