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Ethereum reaches an ATH amid its soaring demand as collateral in DeFi

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ETHEREUM ALL-TIME HIGH

Different fundamentals are at play for the second-largest crypto when it comes to the recent price gains

We have only been three weeks into 2021 and already it has broken some records for the Crypto market — Bitcoin posted an all-time high (ATH) of almost $42k on Jan. 07, followed by Ether charting its ATH around $1440 on Jan. 18 and now the total value locked (TVL) in Defi assets crossed the $25 billion mark. Interestingly, the last two are a little more correlated than the first one.

Let me explain how. The second-largest crypto is primarily used as a collateral asset for borrowing & lending in the decentralized finance (DeFi) market, apart from being the primary home base for smart contracts & decentralized applications (dApps). It is this unique set of use cases that drives the interest of investors and traders in ETH.

It was only recently that I wrote about how it was Ethereum’s turn to climb higher. And one of the reasons mentioned was the Defi boom that has taken shape in the past 12 months or so. Although there is no denying the fact that Bitcoin drives the broader crypto market, we are also seeing divergent use case narrative play out in individual cryptos as is the case with Ethereum.

While Bitcoin was receding from its ATH, Ethereum propelled higher to its ATH. An interesting question that is now being raised by some is, what would happen if bitcoin could more easily be used in DeFi — would the premier digital coin infringe on ETH’s territory? For now, price volatility is the running theme in cryptos as the wild swings continue to dominate the digital market.

According to the Chainalysis Market Intel, The short term conditions for price volatility strengthened last week. inflows to exchanges fell 11% and median trade intensity was down 6% in the last seven days as compared to the prior seven days, although Ethereum exchange balances only increased in recent days after initial declines. The data suggests while volatility may continue for a little longer but the profit-taking may be easing off.

Source: https://medium.com/technicity/ethereum-reaches-an-ath-amid-its-soaring-demand-as-collateral-in-defi-5f5160765f2a?source=rss——-8—————–cryptocurrency

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