📈 The 2017 Rally 📈
There was a flood of interest in order to invest in scammy ICOs. These required ETH in order to invest and there was a flood of demand for it. These funds were also sent to ICOs that were fickle and did not have strong hands. In order to realise their gains from the ICO. This meant that the funds were dumped on the market. ETH went from an All Time High of over $1,400 all the way down to below $100.
💸 Different Investors 💸
While back in 2017 was a mostly retail driven rally, it appears as if this time that those which are buying are deep pocketed institutions and whales. You can see this not only in the increase in the amount of ETH that is held at the likes of Grayscale. It is up to over $2 billion which is 10x on the amount that it was back in May of this year. We can also take a look at some of the on-chain data that should point this out. According to a chart by Santiment, in the last few weeks of December, the number of Whale Wallets has been increasing whereas the number of wallets with than 10,000 ETH has been decreasing. This can only mean one thing: The Whales have been accumulating at the expense of the smaller investors out there. There are also ETH futures which are about to launch. These could lead to an explosion from the institutional investors who are looking to hedge.
📈 DeFi 📈
2020 was the year of Decentralied Finance or Defi. We started with total value locked (TVL) of just below $500 million and are currently sitting at just below $20 billion. Over 95% of that Defi exists on the Ethereum blockchain. That means that all that crypto that has been locked over there is Ether. You should also note that this TVL is a lot more sticky than the funds that were sent to ICOs back in 2017. It’s not up to ICO project teams as to whether that locked ETH is to hit the market. It is completely up to the user that send their funds. There is some additional on-chain info like a falling exchange balances which shows people self custodying their ETH.
💲 Stablecoin Demand 💲
There is insane demand for stablecoins right now and given that ETH is the primary settlement layer. This means that there will be insane demand to use the Ethereum network. This is also likely to increase substantially in 2021. This is because of the OCC announcement that stablecoins can be used to settle between banks. Visa has entered an agreement with Circle financial in order to connect the Visa network to the USDC There are millions of merchants and this could means insane demand to use the Etheruem network
⚡️ ETH 2.0 ⚡️
ETH 2.0 launched in December of 2020 and already there is insane demand for the staking. 2 million ETH has been locked up in the contract and this cannot be easily withdrawn. This takes ETH of the market and hence leads to an increase in price. You also have to consider that there is EIP 1559 that is likely to be pushed through this year. This will mean that there will be fee burns which will neuter inflation and make ETH supply stable
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.