Ethereum has paved the way for a new bullish phase in the cryptocurrency market as it surged to a two-year high of $474 after breaking above the previous level of resistance at $442.
The recent rally has been attributed to the increased attention around decentralised finance (DeFi) projects like Yearn Finance (YFI) and decentralised exchange Uniswap, both of which are built on Ethereum’s blockchain.
Members of the Yearn Finance community have forked the protocol to create DFI.Money (YFII). The YFII token has risen from a daily low of $3,171 to as high as $7,000, demonstrating the high levels of demand these tokens currently have.
Exchanges like Uniswap enable customers to deposit Ethereum or erc-20 tokens in order to swap them for other tokens, this creates a natural level of demand for Ethereum, thus causing its price to rise.
Although several analysts tipped Bitcoin to lead the way in 2020 as a result of the recent block reward halving, it seems as though the hype surrounding Ethereum-based projects has stolen the limelight from the original cryptocurrency.
In terms of Ethereum’s price action, the current level at $468 was the point of resistance that suppressed price for three weeks at the end of 2017 before the eventual surge to its all-time high of $1,400.
If Ethereum can break above this level in the coming weeks it would almost certainly create a scenario in which it could form a new all-time high before the end of the year.
A rally of this magnitude will also cause a wider impact on the cryptocurrency market as investors and traders will take profits in Ethereum before diversifying their portfolios to buy other coins like Bitcoin, XRP and even lower market cap tokens like YFI and YFII.
Bitcoin, meanwhile, needs to break above $12,500 in the short term before taking on the $14,000 level of resistance.
For more news, guides and cryptocurrency analysis, click here.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.