Data Shows Ethereum Transactions Are Surging in 2020 as Institutions Jump Onboard
Ethereum, the world’s second-largest cryptocurrency by market cap, has shown strength in both fundamental and technical factors this year. The protocol has been increasingly adopted by enterprises as a blockchain tool and by investors for its long-term growth potential.
ETH Fundamentals are Strong
The cryptocurrency continues to follow Bitcoin’s market performance, much like other altcoins, but all signs of weakness are quelled as on-chain fundamentals flash positive signals.
As per data collated by on-chain research firm Glassnode, Ethereum usage has grown by multiples in 2020. Metrics show rising transactions across various wallets, exchanges, and dApps, signaling the growing use of ETH, the protocol’s native token.
For investors, the fundamentals mean higher prices in the medium-term future. Institutions like Grayscale, which said last month it picked up millions of dollars worth of ETH in 2020, typically look at fundamental metrics such as on-chain behavior and the broader growth of a crypto protocol before investing.
One analyst believes ETH may reach over $500 within the next year, a value almost double that of the current $242 trading value at the time of writing. For the first week of June 2020, ETH seemed to move in sync with BTC, but faced strong selling and resistance as miners exited the latter’s network.
Glassnode analytics founder Rafael Schultze-Kraft, earlier a data scientist before ventured into the cryptospace, noted Ethereum is seeing “heavy” transactional volume while observing unprecedented growth in dApps and DeFi applications.
He said on Twitter:
#Ethereum has seen a surge in usage in 2020.
The number of new addresses involved in more than one $ETH transfer has grown significantly this year.
New daily addresses with:
3+ txs: 32k (+ 159%)
5+ txs: 19k (+ 137%)
10+ txs: 9k (+ 114%)
25+ txs: 4k (+ 104%)
50+ txs: 2k (+ 98%) pic.twitter.com/FwA8qdwHZP— Rafael Schultze-Kraft (@n3ocortex) June 6, 2020
Institutions Leading the Race
As BTCManager reported in April 2019, Grayscale institutional buyers have purchased close to half of the ETH added to the cryptocurrency’s total supply since the start of 2020. Grayscale investors have bought about 48.5 percent of the ETH mined so far in 2020. This massive ETH appetite among the firm’s clients is despite the massive 420 percent premium on Grayscale’s Ethereum fund.
Keeping in mind the above, and the data from Glassnode, Ethereum’s potential price rally will be supported by strong fundamentals, lessening the risk of a “bubble” seen in 2018 as weak ICOs clogged the network and floundered investors of millions of dollars.
The upcoming launch of ETH 2.0 may also serve as a bullish factor as the Ethereum network shifts to a PoS algorithm with advances in scaling, speed, and security.
