How Crypto Bull Markets Have Been Influenced and Driven by Ethereum

Ethereum Liquid Staking Protocols Spark Centralization, Depegging Concerns

Ethereum prices are surging again today leading broader crypto markets higher once again, and this appears to be a trend that has happened before.

Ethereum is the top performing digital asset at the moment, gaining more than 14% on the day and beating all other assets in the top twenty by market capitalization. ETH prices hit an intraday high of $1,667 during the morning hours of July 27 before retreating slightly at the time of press.

The recent crypto rally, which has seen a total cap gain of $200 billion in two weeks, has also been driven by Ethereum and momentum for its long-awaited transition to proof-of-stake.

Furthermore, the ETH/BTC ratio is also trending towards its highest levels as the asset continues to outperform.

The driver of the bulls

Ethereum advocate and Bankless founder David Hoffman proposed the notion that crypto bull markets have been driven by Ethereum.

In 2017, the ICO (initial coin offering) boom which was funded in ETH drove markets higher. In 2021, a DeFi (decentralized finance) and NFT (nonfungible token) boom was also critical to market momentum. These also had Ethereum as their foundations as did many stablecoins which also altered the narrative away from BTC in the last cycle.

Hoffman predicted that the next bull market will also be Ethereum-led and early signs are showing just that. His reasoning behind this premise is that the next bull market will be based on fees.

“Bitcoin’s unsustainable security budget is actually not going to be an issue for like 20 years… as $ETH goes through a 20-year bull market and helps support BTC price along the way,” he commented.

The counterargument is that Ethereum fees have made using the network unsustainable for the majority of non-whale retail traders. Furthermore, the Merge will not solve this as changing consensus to proof-of-stake doesn’t necessarily reduce gas fees.

Ethereum has a long way to go

This will only occur when the network can scale with sharding and side-chains, and this is not likely to happen until 2023 at the earliest.

Ethereum has a long way to go before it is ready for adoption by the masses. Even co-founder Vitalik Buterin recently said that the system would only be 55% complete after the Merge.

A reduction in issuance and staking rewards is likely to be a bigger factor for Ethereum going forward as investors seek longer-term gains from a decentralized deflationary digital asset.


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