At the moment though, the focus is on the high cost of gas and the ramification it has on the ecosystem. Ethereum draws users because of its distribution.
Subsequently, the high participation rate translates to a high utility which goes on to prop ETH prices.
Smart contracts count spike to new highs
Reflective of demand, Ethereum’s smart contracting activity is at an all-time high according to GlassNode. This primarily stems from the sharp increase in DeFi activity. Notably, the expansion of Uniswap as a leading DEX is impressive.
The growth of DeFi is shaping, a main highlight in the crypto scene. Solely because of open finance activity have we seen ETH prices pump because of the above rate yields proposed by DeFi dApps for incentivization.
The high fees could be a deterrent but the innovation sparking the flow of funds from traditional portals to crypto could just be the beginning of something great.
DeFi is new, users should be cautious
Nonetheless, the co-founder of Ethereum, Vitalik Buterin is cautious.
Describing himself as not DeFi savvy but comparing the role of automated market-making pools to central banks who are incessantly printing money, he calls for caution.
Considering the nascence of DeFi and more pronounced smart contracts blip arising from the lack of professional audits, millions of funds have been lost.
There is room for improvement required but in the days ahead, the revolution triggered by these trustless protocols could found a profound paradigm shift.
Ethereum price analysis
The Ethereum price is under pressure. After losing over $100 in three days, the path of least resistance is southwards.
According to trackers, the ETH price is down six percent against the greenback in the last week of trading. Encouragingly, it is outperforming BTC which took a hit, losing over $1,500 within the same period.
From the daily chart, the rejection of Sep 2 was with high trading volumes. Subsequently, losses were also accompanied by above-rate participation pointing to flowing sellers. Losses of Sep 2 confirmed a double bar bear reversal pattern. The aftermath saw gains of the previous week reversed as the Ethereum price slid towards the main support at $350.
As it is, $350 is the main support level. Since prices are trending below the 20-day moving average, every high is technically a selling opportunity.
A break below $350 could spark another wave of liquidations with targets at June 2020 highs of $250.