Recent global events have brought attention to the cryptocurrency sector as people around the world began to question the decision-making process of governments and central banks.

Some calculations, such as an increase in the amount of Ether (ETH) and Bitcoin (BTC) blocked on DeFi, an increase in the number of transactions and activity on the chain, and a decrease in BTC and Ether reserves for the most important exchanges, show that investors are increasingly interested in cryptocurrencies.

Data from CryptoQuant, a chain-link analysis firm, shows that Ether (ETH) hit a new permanent high of over $ 1,500 on February 2, and the amount of Ether held in all major foreign exchange reserves continued to decline to new lows. token pull Holders of their coins.

Many analysts believe that the rapid expansion of the DeFi sector, the launch of Eth2 and the increased participation of institutional investors are the main reasons for the fall in BTC and Ether on centralized exchanges.

DeFi comes and grows
Each week, the number of members interacting with the DeFi sector seems to be hitting a new high, and as of February 2, the total value of DeFi closed platforms has reached $ 28.67 billion.

Defi Pulse data shows that most DeFi platforms are built on the Ethereum network and require ether to process the protocol.

Aside from offering only attractive ways to profit from Ether lending, an increasing number of the available offerings are aimed at DeFi-related activities and are not available for trading purposes.

A similar phenomenon occurs with BTC, where owners who want to participate in a DeFi room without selling their bitcoins encapsulate it in synthetic versions of ERC-20 Ether.

Platforms like REN and BadgerDAO are spearheading the effort, and a similar depletion of the available Bitcoin supply could also help push the price of BTC higher.

Eth2 and extended buffering
Since the launch of the Beacon Series on December 1, 2020, the Eth2 contract has allowed token holders to participate in Ether in a new PoS contract by becoming network auditors.

Data from the Eth2 launch program shows that there are currently 2,907,298 Ethers installed on the network with a total value of $ 4.39 billion, or approximately 9.2%.

Total ETH versus the estimated annual interest rate. Source: Eth2 Launch Platform
The contract contains a multi-year commitment, but for carriers who refuse to bear the risk and volatility of Defi’s income, Eth2 Staking provides a way to generate profits over time, rather than leaving tokens on exchanges or in cold wallets.

Institutional Investors Are Starting to See Ether’s Value Proposition
Since 2020, Bitcoin has received much of the attention from its institutional investments, as investors like MicroStrategy CEO Michael Sailor are leading the way, buying massive amounts of Bitcoin and continuously tweeting about estimated future value.

Now that Bitcoin is over ten years old and considered more established, companies are increasingly open to looking for the next big opportunity that the cryptocurrency sector has to offer. With the rise of DeFi and the current adoption of the Ethereum network, Ether is fast becoming the preferred option for institutional investors.

Grayscale Investments temporarily closed its various crypto funds for new investments at the end of December following a surge in bitcoin prices, but the flow resumed in early January and total Ether holdings increased by 242% in the past three months.

Grayscale Ethereum Trust has been acquiring ETH over time. Source: Grayscale Investments
Coinbase also noted in its 2020 annual review that institutional investors are increasingly looking at Ether as a store of value, with a “growing number” of its institutional customers positioning themselves on the symbol because of the high returns on offer.

The stock exchange also indicated that while most customers bought BTC during 2020, Ether experienced a strong end of the year when it overtook BTC in terms of price increases, a trend that will continue in 2021.

Bitcoin and Ethereum indicators since the beginning of the year. Source: data on digital assets.
Defi’s continued growth, the attractiveness of Eth2 contracts, and increased institutional investor involvement are all signs that Eth’s price may continue to rise.

Source: CoinTelegraph