The price of Ethereum (ETH) has hit $470, breaking a 2020 high today. The cryptocurrency is up 12% from a 24-hour low of $419.
Ethereum has now been on a bullish rally since mid-March and has more than quadrupled in value after reaching its 2020-low of $110. Overall, the price of Ethereum is now 18.7% in the last 30 days, and 167.5% in the last year.
"Ethereum’s price rise is clearly a statement of intent from the Decentralised Finance (DeFi) community, with Ethereum now at a two year high above $450, the coin’s price rise is positive in an environment of high gas prices and transaction costs recently, which often have a negative impact," said Simon Peters, cryptoasset analyst at eToro, in a market update.
The rampant demand for Ethereum may have been at least partly fueled by rapidly spiking gas costs, which have reached their highest value this year. Gas prices are a measure of transaction fees on the platform. The average gas price now stands at more than 230 gwei—up 400% in a month and 700% since June 1, 2020. As a result, the average Ethereum transaction fee is currently over $6, compared to just $0.08 at the start of the year.
Ethereum has seen its use as a DeFi ecosystem spike in recent weeks as the total value of assets locked up in DeFi protocols repeatedly smashes records. Now, according to DeFi Pulse, there is more than $9 billion worth of ETH and ERC-20 assets locked of in DeFi, with Aave (LEND), Maker (MKR), and Uniswap accounting for almost half of this.
Another aspect is that a lot of Tether, the most commonly used stablecoin, moves across the Ethereum blockchain. This adds even more transactions to the backlog, making fees more expensive. However, Tether CTO said today that Tether is looking at using second-layer scaling solutions, such as ZK-rollups, to help reduce the load on the Ethereum blockchain.
Ethereum isn't the only DeFi platform that has been picking up steam. Tron (TRX) has also gained 13% in the last 24 hours to reach $0.0296. This growth may also be related to Tron's attempt to jump on the DeFi bandwagon, as DeFi launchpads like TronFi, as well as the YFI-like Pearl.Finance, and Uniswap-like exchange protocol JustSwap have begun picking up momentum.
The price of Bitcoin has gone up today too. It's now at $11,940, up three percent in the last 24 hours and heading towards a milestone of its own: the $12,000 barrier. But will either coin hit their mark?
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.