A vast majority of the crypto market has been in a slump for the past 24 hours, but Ethereum stands apart as the lone top 5 coin in the green. Let’s take a look at why the #2 asset may be outperforming the market right now
Is the DeFi recovery turning investors bullish?
DeFi may be leading the Ethereum counter trend this morning. Decentralized Finance, the “killer-app” for the ecosystem is back over $1 billion in value, locked up in DeFi platforms.
DeFi took a hit over the last month as bZx exchange was hit by consecutive flash loan exploits and lost almost a million dollars worth of Ethereum. This flash loan exploit chilled a lot of the enthusiasm surrounding DeFi and many investors withdrew their funds.
Ethereum is also highly correlated to Bitcoin, so Bitcoin’s price decline from $10,500 to $8200 over the last three weeks has also impacted Ethereum prices. The second largest crypto had a 25% drawdown in price mirroring Bitcoin’s slump.
Now as the trend seems to be changing back to favor the bulls, investors are once again locking value into DeFi and the Ethereum chart is looking bullish again. This may explain why ETH alone is rising in price today while the rest of the market is in the red.
Ethereum currently sits at $243.45, up 2.19% in the last 24 hours. Its recovery will lead the way for many altcoins, which are either built on Ethereum or leverage the DeFi infrastructure.
Ethereum 2.0 is set to be released later this year
Another contributing factor to bullish sentiment surrounding Ethereum has been the rapid pace of development of Ethereum 2.0. This is the network’s planned switch to a Proof of Stake consensus mechanism.
There has, however, been a bit of infighting in the Ethereum community surrounding ProgPOW. This involves a proposal to force PoW miners on the network to eventually migrate to the PoS consensus planned for the network.
Long story short, ProgPOW will make ASIC miners invalid for mining ETH, making miners with GUI and other…