How Crypto Bull Markets Have Been Influenced and Driven by Ethereum
Ethereum prices are rising again today, leading broader crypto markets to rally again, and this appears to be a trend that has happened before.
Ethereum is currently the best performing digital asset, gaining more than 14% on the day and beating all other assets in the top twenty by market capitalization. ETH prices hit an intraday high of $1,667 during the morning hours of July 27 before retreating slightly at press time.
The recent crypto rally, which has seen a total gain of $200 billion in two weeks, has also been fueled by Ethereum and momentum for the long-awaited transition to proof-of-stake.
Furthermore, the ETH/BTC ratio is also trending towards its highest levels as the asset continues to outperform.
The driver of the bulls
Ethereum lawyer and Bankless founder David Hoffman proposed the idea that crypto bull markets have been powered by Ethereum.
In 2017, the ICO boom (initial coin offering) funded in ETH drove the markets higher. In 2021, a DeFi (decentralized finance) and NFT (nonfungible token) boom was also crucial to market momentum. These also had Ethereum as a foundation, as did many stablecoins that also changed the narrative away from BTC in the last cycle.
Hoffman predicted that the next bull market will also be Ethereum-led, and early signs show just that. His reasoning behind this premise is that the next bull market will be based on taxes.
“Bitcoin’s unsustainable security budget isn’t actually going to be an issue for like 20 years…as $ETH goes through a 20-year bull market and helps support the BTC price along the way,” he commented.
The counter argument is that Ethereum fees have made using the network unsustainable for the majority of retail traders who are not whale traders. Furthermore, the merger will not solve this as changing consensus to proof-of-stake does not necessarily reduce gas taxes.
Ethereum has a long way to go
This will only happen when the network can be scaled with sharding and side chains, and this will probably not happen until 2023 at the earliest.
Ethereum has a long way to go before it is ready for mass adoption. Even co-founder Vitalik Buterin recently said that the system would only be 55% complete after the merger.
A reduction in issuance and staking rewards is likely to be a bigger factor for Ethereum going forward as investors seek long-term gains from a decentralized deflationary digital asset.
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