Is Ethereum price likely to approach $ 2,000 in the short term?
Both on-chain and transaction figures show that Ethereum price is on its way to the $ 2,000 threshold.
Analysis: Is Ethereum price likely to approach $ 2,000 in the short term?
In early February, the official implementation of Ethereum futures trading by CME raised concerns that the history of Bitcoin CME will repeat with ETH futures. However, things have been going in a positive direction, eliminating the concerns of many analysts.
However, the Ethereum network still has many problems that undermine the confidence of investors, notably the ETH transaction fees continue to be “expensive”.
Not every user can pay a $ 12 fee for a money transfer.
Transaction fees on the Ethereum network are incredibly high | Source: BitInfoCharts
A simple token swap on decentralized exchanges (DEXs) can cost gas in the hundreds of dollars – forcing retail users to abandon the network.
The good news is that many proposals are testing sharding and layer two solutions to avoid this problem, such as EIP-1559, Skale, and Optimistic Network. In particular, according to Grayscale hedge fund, the new EIP-1559 upgrade could continue to blow Ethereum price high.
Additionally, Ethereum 2.0 will use sharding to divide the blockchain into parts and increase the number of transactions the network can process at once.
With that, the phenomenal growth of total locked-in value (TVL) in decentralized financial (DeFi) projects cannot be ignored.
As shown above, the 34% gain of TVL over the past 30 days is in line with a 38% increase in ETH in February 2021. Regardless of the transaction fees, the AMM and DeFi’s staking mechanism still bring real value to Ethereum.
Coin Metrics data shows a daily transaction volume of over $ 9 billion, up 32% from the previous month. This significant increase in transaction value proves that the Ethereum price is sustainably established, not just pumping.
Price line ETH / USD vs. transaction volume on Ethereum | Source: Coin Metrics
Other figures show that between January 1 and February 15, around 600,000 ETH were withdrawn from exchanges. Whether whales are moving ETH to cold wallets or bringing ETH into the DeFi ecosystem, the withdrawals are unlikely to be sold in the short term.
ETH / USD price (black line) vs. ETH reserves on exchanges (red line) | Source: CryptoQuant
This indicator shows the confidence of those holding ETH. And so, what could be more when investors believe in the future and development of the project!
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