The price of Ether has hit a new yearly high at $322, as three key factors appear to be catalyzing the rally.
The price of Ethereum (ETH) has reached a new yearly high at $322, surpassing the previous high achieved in February 2020. Three key catalysts are seemingly behind the ETH rally.
Since early 2020, the anticipation of Ethereum 2.0, which would enable staking for users, pushed the demand for ETH upward. Staking allows users to receive incentives when miners are eliminated from the Ethereum network. A proof-of-stake consensus algorithm does not need miners on the protocol. Instead, users with a stake in ETH collectively process data and information through staking. In return, they receive rewards in the form of ETH.
After the so-called “Black Thursday” correction on March 13, when ETH briefly dropped below $90, the DeFi market began to expand rapidly. When new protocols, like Compound, introduced their incentive systems, the demand for decentralized finance increased even further. In May, less than $1 billion was locked in DeFi platforms. As of July 26, more than $3.75 billion is locked across various DeFi protocols.
The optimism around DeFi and Ethereum 2.0 eventually led to Ether spot and options markets setting record high volume and open interest. Since the start of the second quarter, the ETH options market has continuously soared to new highs in terms of trading activity. Consequently, it intensified the uptrend of ETH in a short period.
Cryptocurrency on-chain market data analysis firm Santiment said ETH broke out of $300 for the 42nd time in history. An upsurge above $350 would be significant, according to researchers, because it has only happened three times in the past.