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Why the demand for Ethereum could rise?

11:52 17 六月 /2020

In 2018, due to the growing popularity of ICOs, the demand for Ethereum was huge. Companies made ICOs using the Ethereum blockchain. It was the easiest and most affordable way at the time. Thanks to this, the price of Ethereum peaked at $1419. However, with a decrease in the number of ICOs and the loss of their reputation, the demand for Ethereum also fell, which, of course, affected its price.

Avi Felman from BlockTower Capital analyzed the price of Ethereum for the entire period and concluded that the price increase was due to the specifics of launching the ICO, as ICO participants were advised to buy Ethereum to participate. Investors did not sell Ethereum, which practically reduced the pressure on the price to zero.

avi felman.jpg

Bitcoin, unlike Ethereum, did not have this specificity, and if you look at the charts of these two cryptocurrencies, you can see that their level of correlation is very low.

At the same time, Avi Felman suggests that the demand for Ethereum will grow soon. There are several factors for this.

Firstly, DeFi is growing parabolic, and this can dramatically increase the demand for Ethereum. The ICO boom went through, but it was not the only catalyst for Ethereum price growth. Ethereum 2.0 could trigger an increase in demand for ETH, as demand for blockchains could increase.

It is also worth noting the profit on the Ethereum. Unlike other cryptocurrencies (XRP for example), ETH profits were relatively small. Many altcoins received a price increase without any real activity. And the value of Ethereum was fair in the period 2017-2018.

These factors can help Ethereum increase demand. However, this does not mean that they will all work.

Some investors, such as Michael Novograts, are convinced that the cryptocurrency and the underlying blockchain do not yet have such an option as Bitcoin and cannot get such wide distribution.

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