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Bittime - Ethereum (ETH)is one of the most popular crypto assets in the world. In the first nine days of February 2024, the price of ETH rose 10% and broke through the $2,450 level or around IDR 38.2 million for the first time in three weeks.
This increase is in line with the bullish momentum of the crypto market as a whole and is influenced by the global macroeconomic situation. What are the factors that support ETH's rally to IDR 38.2? Let's look at it together.
Chinese Economic Data and US Fiscal Debt Open Opportunities for Risk Assets
On February 4, 2024, US Federal Reserve Chair, Jerome Powell, emphasized the need for a more sustainable public debt path in an interview.
By 2023, US debt service costs will reach 2.4% of the country's gross domestic product (GDP), and projections show a potential increase to 3.9% in 2034, according to a Congressional Budget Office Report.
This projection prompted a cut in the Fed's policy rate, according to Neil Irwin, author of Axios Macro.
Traditional financial investors faced additional concerns from China when the January Purchasing Managers' Index (PMI) showed manufacturing activity contracting for the fourth straight month.
After China's central bank made its biggest cut in three years to mandatory cash reserves for banks, the government is taking steps to support the real estate development market, which is currently stressed due to high debt leverage, according to AP News.
Investors also sold some fixed income positions. This caused the two-year US Treasury yield to hit a two-month high of 4.48%, up from 4.21% on February 1.
Simultaneously, on February 9, the S&P 500 index hit a record high above $5,000, indicating that investors are not too worried about a potential economic crisis, at least in the short term.
Nevertheless, the US fiscal debt trend, raised by the Fed Chair, creates an ideal scenario for scarce alternative assets like Ethereum.
This movement poses a challenge for crypto as the stock market continues to attract the majority of flows for risk assets.
Simultaneously, however, this opens the door to alternative investments as some stocks, such as chipmaker Nvidia and e-commerce giant Amazon, currently trade at 33 times 2024 earnings, much higher than the S&P 500 average of 22 times .
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Ethereum Price Rally Powered by Ethereum Network Activity
To assess whether Ethereum's price increase in February was supported by continued demand for ETH, we must examine the on-chain activity of the Ethereum network.
The network's smart contract deposits, as measured by total value locked ( TVL ), reached an 11-month high on February 9 at 16 million ETH, marking a 19% increase from the previous month.
However, most of the surge occurred in liquid staking solution EigenLayer, which surged to a TVL of $5.85 billion on February 9, up from $1.15 billion the previous month.
Smart contract deposits show that Ethereum network users are increasingly confident and committed to the platform.
Additionally, Ethereum network transaction activity also increased, reaching a record high on February 5 with more than 1.3 million daily transactions.
This shows that there is high demand for using Ethereum-based services, such as DeFi, NFTs , and gaming.
Apart from internal factors, Ethereum also receives support from external factors, such as institutional adoption and technological innovation. Some examples are:
- Grayscale , the world's largest crypto asset manager, announced that it will convert its Grayscale Ethereum Trust into an Ethereum ETF , which will attract more investors to ETH.
- Visa , the global payments giant, announced that they will support transactions of USDC, an Ethereum-based stablecoin, on their network, which will increase the use and adoption of Ethereum.
- Optimism , one of the layer two solutions to improve Ethereum's scalability and efficiency, is launching its public beta, which will allow developers and users to enjoy lower gas fees and higher transaction speeds.
Conclusion
Ethereum is a crypto asset that has a lot of potential and value. The increase in the price of ETH to $2,450 (around IDR 38 million) did not just happen, but was driven by various factors that show the strength, demand and innovation of the Ethereum network.
Despite the challenges and risks faced by Ethereum, such as competition from other platforms, scalability issues, and regulatory uncertainty, Ethereum remains one of the leaders of the crypto market and has bright prospects going forward.
How to Buy ETH Tokens on Bittime
You can buy and sell ETH tokens in an easy and safe way via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappbeti. ETH is available on Bittime with ETH to IDR pairing.
To be able to buy ETH/IDR tokens on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of Bittime assets is IDR 10,000. After that, you can make ETH purchases in the application. A More Complete Guide to How to Buy ETH on Bittime
Monitor the price chart movements of Ehereum (ETH), Bitcoin (BTC), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also read:
What is Ethereum (ETH) 2.0 and how is it different from Ethereum
The Important Role of the Ethereum Virtual Machine (EVM) in the Ethereum Ecosystem
DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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