After a long recent price rally, Ethereum posted its longest winning streak in a while in 2020, while the broader cryptocurrency market also entered a correction due to the recent slump. With $112 million of ETH option contracts expected to expire on Friday, some investors are bracing for a bigger pullback.
However, Weiss Crypto Ratings notes that Ethereum is on track to hit a new record high, and they stress that traders remain bullish on the second largest cryptocurrency.
Retracement complete. Wait for the next rally
Just a few days ago, the price of bitcoin dropped sharply to the $11,300 area. This pushed other mainstream cryptocurrencies, such as Ethereum, below key support areas. After days hovering above $400, Ethereum fell below $380, but traders were not surprised by the pullback.
In a tweet on August 25, Weiss Ratings, a leading CRYPto economics research firm based in the United States, attributed the decline in ethereum’s popularity to a pullback in price. Weiss believes the cryptocurrency is now aiming for new heights as it sees a correction in prices.
At the time of writing, ETH was trading around $383.42 after gaining 0.21 points in the past 24 hours.
Fundamental indicators are still good
While ethereum prices have stagnated in recent days, the DeFi space continues to grow at breakneck speed. The total value of locked in DeFi agreements recently topped $7 billion for the first time, according to data provided by DeFi Pulse.
Aave is the largest DeFi agreement to date, with $1.51 billion in locked assets. Aave’s exponential growth in the past few days came after its lending platform was granted an electronic money institution (EMI) licence by the UK’s Financial Conduct Authority (FCA). The Aave agreement was followed by MakerDAO, which locked in $1.42 billion.
DeFi aside, experts believe ETH’s on-chain data base is more powerful than ever. For example, Chris Burniske, partner at Placeholder Capital, thinks Ethereum’s strong “on-chain economy” and mainstream perceptions of crypto assets could spark a wild rally.
“Meanwhile, for mainstream Ethereum, new challenges could change its current state, and hopefully the implementation will go crazy,” Chris said. Given ethereum’s outperformance of BTC over its lifetime, not to mention the small network value and strong on-chain economy, I think Ethereum and Bitcoin will outperform other cryptocurrencies.”
As a result, they believe that the booming DeFi and on-chain economy could take Ethereum beyond its previous highs in the near future.
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