The price of Ether reportedly hit a 19-month high against bitcoin as user activity on Ethereum spiked to multi-year highs. As the price of ETH surged above $450, a large buy wall on the major crypto exchange Bitfinex emerged. A short while later, ETH reached $270, a 19-month high against BTC.
All through the last two months, ETH has sustained strong upwards momentum supported by the rising user activity on Ethereum. Data obtained from Etherscan indicates that the daily transaction volume on Ethereum increased from around 420,000 in January this year to over 1.2 million transactions daily in August.
Why ETH Price Keeps Surging as Ethereum’s Demand Grows
The massive demand for Uniswap and the small decentralized finance (DeFi) tokens has developed a constant demand for ETH. Users have to use ETH to cover transaction fees on the Ethereum blockchain network. The ETH that covers transaction fees is also known as ‘gas.’
The gas costs due to surging daily transactions made users buy ETH to pay for the network expenses. Since early June, when the decentralized finance market started to experience exponential growth, it fueled the massive buying demand for ETH.
Based on the data acquired from the on-chain market analysis firm Glassnode, the gas costs are increasing rapidly which is in turn causing the miner revenues to spike. The researchers wrote:
“Ethereum miners earned over $500,000 USD in transaction fees in the past hour. That is a new record high for a single hour (anomalous transaction fees earlier this year excluded).”
The continuing trend is most unlikely to change in the near term as second-layer scaling solutions and ETH 2.0 is quite far.
Yet, the DeFi market is constantly expanding which has pushed more users to decentralized platforms like UniSwap. It remains to be seen whether that would add more buying demand for ETH for the whole of September.
Spotting this demand, whales and wealthy individual miners are allegedly purchasing ETH. Bitfinex chief technical officer Paolo Ardoino said:
“Someone wants really to buy ETH on Bitfinex 7k bid wall.”
Bitfinex is one of the few exchanges that are used by many whales, alongside Bitstamp and Gemini. Interestingly, the 7,000 ETH at a price of $458 is equivalent to $3.2 million. That is a huge single buy order on a crypto exchange.
What Traders Comment About The Short-Term Trend
In the near term, the traders are generally optimistic about the price of Ether and Bitcoin. Both top cryptos saw their respective monthly candle close at a multi-year high. One full-time trader at the Amsterdam Stock Exchange, Michael van de Poppe, believes that a minor consolidation is likely.
Poppe also suggested that another attempt at $12,400 is highly likely for the bitcoin price. In this scenario, ETH will lead the way. He added:
“Bullish trend reached the $12,000 area that I’ve pointed since the low. I would like to see a consolidation above $11,600 here. If that happens, we’ll most likely see a rally towards $12,400 and new highs. ETH is already painting the way.”