The price of Ethereum has risen sharply recently to reach a 19-month high against the price of Bitcoin. The surge is largely attributable to growing user activity on the Ethereum blockchain that has in turn increased the demand for ETH.
The Ethereum network has been particularly busy recently with a sustained rise in the number of daily transactions. According to data from Etherscan, the daily transaction volume rose to more than 1.2 million per day for the month of August. This figure has almost tripled since the start of the year with January averaging about 420,000 daily transactions.
This explosive growth in activity is driven by the increased demand for Decentralised Finance (DeFi) tokens as the new phenomena continues to take over the crypto sector. Majority of these tokens are embedded on the Ethereum network requiring users to spend some ETH, referred to as gas, for every transaction. The surge in demand for Uniswap and other small DeFi Tokens, has triggered an increase in the gas costs. This in turn has led users to buy more ETH to cover the growing fees thus creating a huge Ethereum buy wall.
The sustained buying pressure has benefited a particular group named Ethereum miners. According to blockchain analysis firm, Glassnode, miners’ revenues have spiked sharply setting new records in the process.
#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).
Chart: https://t.co/RZz5yMV44U pic.twitter.com/fmyD5zZSYs
— glassnode (@glassnode) September 1, 2020
Ethereum’s sustained upward price momentum is likely to hold in the near term as the network is yet to deploy second-layer scaling solutions while ETH 2.0 upgrade is not ready for implementation. On the other hand, the DeFi market is still building momentum that is unlikely to end in the near future. The continued expansion is set to continue as more users are joining decentralised platforms thus potentially raising the demand for ETH.
The market dynamics have not gone unnoticed as wealthy individuals, known as crypto whales, seem to be eyeing up the opportunities. This is evidenced by a recent spike in the number of high volume trades occurring on crypto exchanges. Bitfinex chief technical officer Paolo Ardoino flagged one of such transactions posting a tweet citing a recent buy bid for 7,000 ETH.
Someone wants really to buy $ETH on @bitfinex
7k bid wall pic.twitter.com/orKtEJe0eP
— Paolo Ardoino (@paoloardoino) September 1, 2020
At a price of $458, the 7,000 ETH is worth more than $3.2 million, an eye watering figure for a single transaction. This is a clear indication of the state of affairs in the crypto markets.
Image courtesy of iconscout
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