Ethereum might be the most diversified Layer 2 bet with 600% upside potential
- Solana, a non-Ethereum virtual machine compatible chain, has witnessed an exponential rise in TVL, posing a threat to the ETH ecosystem.
- On-chain activity and user adoption of Ethereum is rising, undeterred by the recent drop in price, bullish for the altcoin.
- Analysts observe similarities between Ethereum’s ongoing rally and Bitcoin’s 2017 bull run, target $20,000 by the end of 2021.
Reduction in Ethereum supply and plummeting spot exchange reserves of Ether indicate a bullish outlook.
Ethereum rally to $20,000 becomes more likely with recent updates
After a successive price rise over four weeks in a row, Solana has hit a market capitalization of $51.7 billion, garnering mainstream media attention as an Ethereum rival. Among other layer one protocols, Solana is the only one that is not compatible with the Ethereum Virtual Machine, the network’s Turing-complete machine that interacts with smart contracts.
Solana’s meteoric rise has positioned it as a top contender for capturing larger DeFi market share in competition with Ethereum.
The launch of ETH2 (migration of Ethereum from Proof-of-Work to Proof-of-Stake) will see Ethereum capturing an even larger share of the DeFi and NFT market, boosting the demand and utility for Ether.
The altcoin’s open interest in perpetual futures contracts has hit a new all-time high of $7.8 billion as the overall interest in crypto derivatives hit a peak this week.
More traders are motivated to take leveraged positions since the crypto market’s recovery from the September 7 flash crash. A rise in open interest is equated with rising bullish outlook on Ether among traders.
When investors anticipate an upcoming rally in a cryptocurrency, they buy and hold perpetual futures contracts. This implies that investors are expecting a rally in Ethereum.
According to CoinMetrics, a crypto market analytics and data platform, cascading liquidations do not impact the fundamentals of an asset. Since the beginning of 2021, Ethereum has added over 6.2 million wallet addresses (holding 0.01 to 1 Ether).
The altcoin’s adoption by users is on the rise, and it is undeterred by market volatility and price crash.
Liquidation cascades have dramatic effects on price but don’t change underlying fundamentals. #Ethereum added more than 6.2M addresses holding 0.01-1 ETH year to date.
— CoinMetrics.io (@coinmetrics) September 10, 2021
User adoption is growing rapidly and was not meaningfully impacted by the crash.https://t.co/IHZvm2D16q pic.twitter.com/qX2sPEGfDH
Pseudonymous analyst @IamCryptoWolf has observed that the current price trend of Ethereum is similar to that of Bitcoin in the 2017 bull run. The analyst is expecting a run to $20,000 before the end of 2021.
#Ethereum chart has been ridiculously similar to $BTC 2017.
— Wolf (@IamCryptoWolf) September 10, 2021
20k $ETH isn’t that crazy as a target.
FXStreet analysts observe a consolidation in the altcoin’s price, as bulls anticipate that ETH will retest the $4000 level.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
