Ethereum broke past $1,200 for the first time in about three years on January 6, 2021. The second-biggest crypto has extended its weekly gains to 62%. Bullish sentiment surrounding ETH intensified on Wednesday and the gains were majorly driven by a confluence of the fundamental factors that include BTC’s parabolic rally; the expectation of ETH futures contracts and the increasing DeFi industry.
Ether’s value peaked at $1,223.84 on Bitstamp recording the highest level since January 2018 days before the market topped. At the time of writing, ETH is trading around $1,200 and it is up by over 60% in the past week which brought its cumulative market capitalization to $135 billion.
At this pace, ETH seems poised to break its record high of $1,432.88, maybe in the next few days.
Bitcoin Excites The Whole Market
As 2021 heats up, Bitcoin’s gravitational pull on the wider crypto market seems to have intensified. The biggest crypto set a new all-time high of $37,750 hours ago and it seems like it will climb higher.
In the past month, BTC has rallied almost 90% on the back of increasing institutional interest and a major supply squeeze limiting the available supply. Ether together with other digital assets has somewhat benefited from BTC’s leadership pace.
There is some evidence to suggest that the institutional investors are also considering ETH as the Bitcoin trade becomes crowded with the players that have deeper pockets.
CME Set To Launch Ethereum Futures
CME Group has also identified increasing institutional interest in ETH and it has announced plans to launch a new Ethereum futures product next month. Starting from February 8, the traders will have the chance to bet on Ethereum through regulated exchanges.
This new futures product, known as the CME CF Ether Reference Rate, will offer traders with increasing efficient exposure to the digital asset, supporting wider price discovery and, maybe, mass adoption within the institutional circles.
DeFi Boom Is Not Over
While the decentralized finance craze appears to have settled after last year’s historic highs, this ecosystem is expanding in lockstep with the wider market. As of January 6, 2021, almost every major DeFi coin in the top 20 had reported double-digit weekly gains; some of them even exceed the explosive price growth of Ethereum.
Since most of the DeFi projects are built on Ethereum, this sub-class has a positive impact on the ETH price. Based on data acquired from CoinMetrics, the DeFi boom may fuel Ethereum’s growth in the long term.
Industry data also show a significant increase in the total value locked, or TVL, in DeFi projects. At the most recent check, almost $21.7 billion had been locked into the ecosystem, the highest on record.