Investors are turning their attention to the leading altcoin again, despite the fact that Cardano (ADA) and Solana (SOL) are still on the rise.
ETH rallies again, and the Ethereum network has fully recovered from a critical bug affecting more than half of the nodes on August 23-27. Since that time, competing platforms have risen a bit, among them Cardano and Solana. Meanwhile, Solana practically displaces Dogecoin (DOGE) from the seventh place in terms of capitalization due to fundamental factors. Among these factors are the appearance of some popular DeFi projects on the Solana blockchain, as well as the Ignition update, which was launched today. With this function, Ignition, SOL tokens will be burned, which should lead to an increase in their price.
Investors and traders alike expect this update to have a lasting effect. The recent example of Ethereum confirms this. After the London hardfork launched on August 4 added the possibility of burning part of the fees, the price of ETH rose for almost three weeks and reached a local high of $3342 on August 23. The growth was almost 30%, ETH was worth about $2,600 on August 5.
If SOL shows comparable dynamics, then Solana will far outstrip Dogecoin in capitalization and approach Ripple (XRP). In turn, Ethereum may also start to rise, after several days of panic caused by the critical error, which almost led to the unexpected fork of the blockchain. Due to the bug, transactions on the Ethereum network were suspended.
Now ETH is returning to growth, which is provided by several fundamental factors at once. Among them: reduction of inflation due to the burning of tokens; growth in investment in DeFi projects; the popularity of NFTs (non-fungible tokens) and play-to-earn games; as well as an increase in the number of decentralized exchanges DEX and stablecoins launched on Ethereum. Since the launch of the London update, over 12K ETH has been burned. This drove inflation down to 1.1% annually. Bitcoin inflation is much higher at 1.75%.
The explosive growth of DeFi total value locked (TVL) capital is going on. At the beginning of the year, it was about $16 billion, and now, according to Altcoin Daily, TVL is over $85 billion. In addition, more than a quarter of above 117 million ETH in circulation is blocked in smart contracts.
All these factors cannot but cause an increase in the value of ETH. Experts believe that the dynamics of ETH in the near future will exceed the same of the recent growth leaders, Cardano and Solana. However, according to CoinShares, institutional investors are in no rush to transfer funds from ADA or SOL to ETH. There is an outflow from bitcoin. This can be called a long-term trend because the outflow from BTC has been observed for 14 weeks in the last 16 weeks.