What’s driving Ethereum to new all-time highs?

OKCoin DeFi asset report

What’s driving Ethereum to new all-time highs?

The price of Ether has continued to set records, following Bitcoin to new all-time highs this past week.  Per OKCoin market data, Ethereum’s native coin is now trading for over $1,950, moving cleanly past the highs of $1,870 set just last week.

Bitcoin appears to be a major factor leading ETH and other altcoins higher. The leading cryptocurrency moved past $56,000 today in the wake of MicroStrategy announcing that it will up its planned investment in BTC to $900 million through the sale of corporate bonds.

Ethereum’s move to new all-time highs in USD terms appears to be predicated on strong institutional demand for the cryptocurrency, along with further strength injected into the DeFi market.

Trading against BTC, however, the leading altcoin’s performance has been weaker. The ETH/BTC pair is trading around 0.35 BTC (or just below $2,000), down about 70% from its January 2018 all-time high around 0.12 BTC (or about $6,600 at current market rates).

As the price of ETH/USD rises and demand for the Ethereum blockchain grows, discussions continue to swirl about the viability of other blockchains and the need for second-layer scaling solutions. 

TL;DR 

  • ETH/USD thrust to new all-time highs this past week, pushing past $1,970 today. But ETH/BTC is still trading well below its all-time high in early 2018.
  • The leading altcoin’s recent growth comes as BTC has also pushed to new all-time highs, amid strong institutional support.
  • Ether is boosted by strong fundamentals, as per on-chain data.
  • The Ethereum network continued to face congestion with increased use this past week, perpetuating the discussion about alternative networks.

ETH shoots to new all-time highs with institutional demand

Ether’s move to all-time highs comes on a spike of institutional demand for the cryptocurrency. 

According to Bybt, a digital asset data site, Grayscale has added nearly 30,000 ETH in the past seven days. At the current price of around $1,950, 30K ETH is worth about $58,500,000.  

Grayscale is giving institutional investors exposure to ETH through its Grayscale Ether Trust. The shares of the Grayscale Trust can trade on secondary markets for retail investors, though they often incur a high premium to the spot price. 

Analysts also noted an influx of Ether from exchanges to what appeared to be cold storage addresses, indicating further accumulation of the cryptocurrency by potential institutions or large holders.

Alongside the institutions bullish on Ethereum, this week Mark Cuban expressed his interest in the digital asset.

The billionaire owner of the Dallas Mavericks, who stars on Shark Tank as an investor, recently said that he thinks Ethereum’s native asset has a better chance at becoming a store of value than BTC, per The Defiant. The Defiant hosted a podcast with the billionaire investor in which he discussed his optimism about decentralized finance and about a recently booming use-case in the Ethereum space called non-fungible tokens, or NFTs. 

Bitwise launches DeFi fund for institutions 

Speaking about institutions involved in DeFi specifically, Bitwise announced this week that it will be supporting the decentralized finance space — the majority of which is based on the Ethereum blockchain — with the launch of a new fund.

Bitwise is a digital asset manager that allows institutions to acquire exposure to digital assets. Their latest fund is the Decentralized Finance (“DeFi”) Crypto Index Fund, which will consist of assets such as DeFi protocol tokens UNI, AAVE, SNX, YFI, and COMP. In a press release regarding the new fund, Bitwise noted:

“DeFi services aim to cut out traditional Wall Street intermediaries, allowing for the potential to facilitate faster operation, 24/7 availability, no minimums or paperwork, full transparency, and auditability.” 

Investors looking to bypass the index model can gain exposure today to top DeFi protocols via OKCoin Earn.

Cream Finance and Alpha Homora exploit

While institutional players may be growing increasingly bullish on Ethereum and DeFi, the space did face a setback this past week when Cream and Alpha Finance, two top 25 DeFi protocols (in terms of total value locked in the protocols) suffered a joint attack.

It began when a user observed a suspicious transaction last Friday morning, which indicated that there were large withdrawals from contracts affiliated with Cream Finance and Alpha Finance, both Ethereum-based decentralized lending platforms.

In a summary following the incident, Alpha Homora explained that there was a bug that had allowed an exploiter to manipulate certain variables within the two protocols to withdraw $37.5 million worth of cryptocurrency to their own address. The variables were situated on a contract in Alpha Homora that had not yet been released to the public, fueling speculation that the exploiter is someone that is close with the team, or even part of the team.

The statement indicated that no users of the protocol actually are lost funds:

“The debt is not between users and Alpha Homora v2, but between Alpha Homora V2 and Cream V2. This is because Alpha Homora V2 is integrated with Cream V2 (Iron Bank) in a protocol-to-protocol lending way. Thus, the debt is between the two protocols and not the users.”

The teams behind the two protocols have stated that they will be working together to find “remedial action to resolve the debt” and discover ways to identify the attacker in hopes that they will return the funds. 

MakerDAO fees spike

Demand for decentralized stablecoins is growing as DeFi continues to gain traction.

Niklas Kunkel, the head of oracles at MakerDAO, noted this past week that each year, MakerDAO collects $71 million worth of stability fees for the issuance of the DAI stablecoin.

To issue DAI, users must deposit ETH or an Ethereum-based token into the Maker protocol then pay an interest rate to take out a loan in DAI. The DAI stablecoin is used extensively within the DeFi ecosystem as a medium of transaction and liquidity. 


Buy ETH and DeFi tokens on OKCoin, your licensed and globally-regulated crypto exchange. Read previous DeFi updates here.

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