The price of Ethereum (ETH) hit $500 on Binance for the first time since July 2018. The timing of the ETH rally is noteworthy because it comes merely two days after it dropped to $456.
Within two days, from its lowest point on November 18, ETH has rallied by nearly 10%.
Several key reasons appear to be buying the sentiment around Ethereum. The main two reasons are likely the resurgence of decentralized finance (DeFi) and the imminence of ETH 2.0.
DeFi Recovery and ETH 2.0 Fuel Ethereum Rally
In the past week, major DeFi tokens in the likes of Yearn.finance (YFI) and Aave posted large gains against both ETH and the U.S. dollar.
Following a capitulation-esqe drop, the recovery of DeFi tokens likely boosted the market sentiment around Ethereum and the wrote:
“Behind the scenes, very few investors I’ve talked to have conviction about whether $BTC, $ETH, or #DeFi tokens outperform this bull market. I don’t blame them for having 1/3 exposure to each, which seems reasonable given the uncertainty.”
This uncertainty could benefit Ethereum as Bitcoin has rallied significantly in recent months. It is already nearing $20,000, and some may think that its upside potential is limited until it passes $20,000.
If Bitcoin achieves a new all-time high, it would enter price discovery, which would lead to a new peak for the dominant cryptocurrency.
Until BTC reaches a new record high, the probability that the appetite for DeFi and ETH would strengthen remains high.