11.05.202118:12 Forex Analysis & Reviews: Ethereum: fundamental factors of the strength of the second cryptocurrency

Ethereum renewed its all-time high again, rising above $4,000 at the moment. Meanwhile, bitcoin is in its consolidation range, and the technical benchmarks have not undergone major changes.

Therefore, today we will consider the second cryptocurrency and the fundamental prerequisites for its further growth. Last week it was said that the ether is likely to be overheated. But while a significant correction is not visible, everything is limited only to consolidation.

Meanwhile, as the price rises, so do the number of active Ethereum addresses. Now, this figure is higher than the previous historical value from January 2018. Analytical company Glassnode reports that on Sunday, May 9, their number reached 7.94 million. In January 2018, the previous high was 7.14 million.

It is noteworthy that in three days when there was a rapid increase in ETH/USD, the number of active Ethereum addresses increased by 100,000. And since the beginning of the year, their number has increased by 86%.

One of the incentives for the growth of the second cryptocurrency is the popularity of DeFi - decentralized finance, as Ethereum creates the basis for this direction. Against this background, experts believe that it will not be difficult for a cryptocurrency to reach a capitalization of $1 trillion.

Shivam Thakral, CEO of the Indian cryptocurrency exchange BuyUcoin, notes that the growth in the number of transactions, active addresses, and the size of commissions are factors that confirm the fundamental strength of Ethereum.

Philip Gradwell of Chainalysis also highlights the upside potential, as the outlook for increased use of ether creates demand for it and therefore drives price appreciation.

It is worth noting that in the first quarter, the Ethereum network experienced congestion and an increase in transaction fees. But there are more and more active addresses, the commissions of market participants do not bother. This means there is a chance for further price strengthening. In addition, the number of searches on Ethereum is increasing, while interest in Bitcoin is decreasing.

As noted in previous reviews, such dynamics may be due to the difference in the price of the first and second cryptocurrencies. Bitcoin has become very expensive for small retail investors. It is possible that while interest in cryptocurrencies continues to grow, Ethereum will benefit more from this than the main coin.

Let's move on to price benchmarks. ETH/USD has technically confirmed 100% Fibo Expansion level (purple line) as support. This means that the closest target for growth is the historic highs set on Monday and the level of 161.8% Fibo Expansion (near 4211.07) passing just above this mark. So far, the second cryptocurrency has a sufficient margin of resistance. And if it is broken, we will apply a new Fibonacci extension to determine the following targets.