Despite the general negative news background and mixed feelings around Ethereum ahead of the Shanghai update, ETH has been trading above $1,700 for ten days in a row. We understand what awaits the price of the asset in the coming weeks and what events could potentially become a catalyst for its price.
DeFi Boom Could Drive Ethereum Price Up
Crypto investors continue to invest in various decentralized finance (DeFi) protocols built on top of the Ethereum blockchain. The growing interest in such platforms was facilitated by both the emerging banking crisis in the United States and rumors of a key rate cut and the launch of a dollar “printing press”.
Since March 13, there has been a steady increase in the supply of Ethereum in DeFi smart contracts, according to Glassnode. In two weeks, it has grown by almost 500,000 ETH – about $832 million. An increase in the volume of blocked tokens temporarily reduces the number of coins in circulation. Thus, the scarcity caused by the DeFi boom could further drive the price of Ethereum.
As the Shanghai update approaches, social sentiment around Ethereum has taken a turn for the worse. According to Santiment data, they have remained negative since March 13. As shown in the chart below, between March 13 and March 27, the weighted sentiment tended to decrease from a marginally positive value of 0.018 to a negative value of -0.24.
Weighted sentiment compares the ratio of negative asset mentions to positive ones. Low values mean that social sentiment around Ethereum is mostly negative. It is noteworthy that large investors may consider this the ideal moment to enter the market. Thus, if user interest in DeFi continues to grow, dysphoric perceptions will push whales to buy in the coming weeks.
The price of $2,500 looks quite affordable
According to the Global In/Out of Money (GIOM) data from the IntoTheBlock platform, Ethereum could hit the $2,500 mark very soon. If ETH breaks the current resistance around $1,800, the next important level will be at $1,900, where 3 million addresses hold 3.19 million coins. However, the $2,500 area looks much more interesting for large investors - 8 million wallets are located in this zone, which account for 26 million ETH.
However, the bears will still seize the initiative if the price of Ethereum falls below $1,600. At this level, 6.4 million addresses that bought 9.4 million ETH could have an asset. If they fail to stop the fall, the asset may head towards $1,400 – at this price, 6.3 million holders purchased about 14.5 million coins.
