Why the increase seen in Ethereum? Bernstein highlights three key factors

Ethereum He earns 65 % in 30 days and approaches the USD $ 2,750, driven by the rise of Stablecoins, institutionalization of Capa 2 solutions and the closure of short positions.

***

• Ethereum has been lagged in front of Bitcoin and Solarium, But your narrative begins to change
• Stablecoins and Financial Tokenization rekindle the institutional interest in their network
• Investment funds close short positions on Eth, What enhances its recent rise

During a good part of the current bullish cycle, Ethereum has been left behind in front of Bitcoin and other competitors such as Solarium. However, in recent weeks, his quote has shown a surprising rebound. From the minimum of the market in April, Eth It has doubled its price, with a gain of 65 % in the last 30 days, reaching levels close to USD $ 2,750 amid certain fluctuations.

In this regard, analysts of the analysis and brokerage firm Bernstein, Led by Gautam Chugani, they published today a report pointing out the reasons behind this unexpected impulse. According to the document, reviewed by The Blockthe narrative around Ethereum It is beginning to transform significantly, so they point to three key factors.

Stablecoins and Financial Token Promote to Ethereum

One of the main catalysts behind the rebound Ethereum is the growth in the use of stablocoins and the tokenization of financial values. This new cycle, analysts point out, is expanding beyond use as a value reserve.

The acquisition by Stripe of the platform Bridge, Specialized in stablocoins, for USD $ 1.1 billion, and recent comments from Goal About reactivating their project with Stablcoins they have generated a renewed interest in networks Blockchains underlying. Ethereum, which houses 51 % of Stablecoins’ total supply, is positioned as the main platform to take advantage of this trend.

In addition, traditional finance giants such as Blackrock and Franklin Templeton They are advancing in the adoption of real world assets. According to data from Rwa.xyz, This market already exceeds USD $ 22,000 million, with Ethereum as a dominant network for its deployment.

Institutional layer 2 networks: the growing role of Ethereum In infrastructure

Another weight factor, according to Bernstein, is the institutionalization of layer 2 solutions on Ethereum. Although some critics question whether these networks really increase the demand for Eth, Analysts highlight that platforms such as Base —Incubed by Coinbase— They generated income close to USD $ 84 million in the last year.

With acquisitions such as Wonderfi by Robinhood —It is based on its own layer 2 network on Ethereum— A future is glimpsed where Brokers offer tokenized actions directly in these networks. Since all these solutions use Eth For its transactions and liquidations, the effect on cryptocurrency demand is direct.

Short closure and change of narrative between coverage funds

The third driver of the rebound Ethereum It is more tactical. During the last 12 to 18 months, many coverage funds used Eth as neutral delta coverage, maintaining long positions in BTC and SUN, while they sold Ethereum short.

However, before the turn towards a narrative more focused on payments with Stablcoins and institutional adoption of intelligent contracts, this approach begins to lose meaning. The analysts of Bernstein They argue that Keep a Eth as “The lag of the market” It is no longer justifiable.

This change also benefits the exchange houses and brokerage platforms, since a broader rebound in the crypto market tends to reactivate the activity of retail traders, generating higher volumes and improving the margins of the sector.

Ethereum, caught between its road map and the narrative of the refuge value

During the last year, Bitcoin It reached new historical maximums, exceeding the threshold of the USD $ 100,000. In turn, the relationship ETH/BTC 45 % fell in the same period, reflecting the growing market preference for BTC as a value reserve. This trend was promoted by the approval of quoted funds (ETF) based on BTC, and his growing adoption as an asset of treasury by companies.

Meanwhile, retail investments turned to networks Blockchain faster like Solarium, leaving a Ethereum “Trapped in the middle”according to analysts: without standing out either as a refuge of value or as the most attractive destination for retail speculation.

However, the behavior seen these last days in the market could reflect a change in the conditions that have affected Ethereum Throughout these last months. It will be to be seen if the digital currency can return again to the registered previous historical maximums, which were very close to the USD $ 5,000 by mid -November 2021.

Written article with the help of an AI content editor, edited by Angel Di Matteo / Diariobitcoin

Original image of Diariobitcoin, created with artificial intelligence, for free use, licensed under public domain

WARNING: Diariobitcoin offers informative and educational content on various topics, including cryptocurrencies, AI, technology and regulations. We do not provide financial advice. Cryptactive investments are high risk and may not be adequate for all. Investigate, consult an expert and verify the applicable legislation before investing. I could lose all its capital.

Subscribe to our newsletter