The spring of 2021 is largely marked by Bitcoin’s impressive price action, ETH’s rise to a target price of $ 3,000, and DeFi’s rally.

Since April 2021, over 950,000 Ethereum has moved from top centralized exchanges. At the same time, the percentage of Ethereum in circulation now locked in DeFi protocols increased from 8.5% to about 10%. This could signal the beginning of a shortage of supply that may occur in the summer of 2021.

Increasing Interest in DeFi Projects

While hedge funds took time to warm up to ETH, interest in DeFi projects increased. ETH loans make up a high percentage of institutions’ credit ledgers, but investment flows are back again this season from ETH to DeFi.

In addition, it’s exciting that Ethereum’s innovative ideas and scaling solutions are rapidly building. The excitement continues, especially as DeFi projects have high demand and a large number of unique users. In fact, quite a few DeFi projects have been created to increase trades and solve scaling issues in the ETH network, helping traders take long positions in ETH.

Projects such as MATIC, Polygon’s 2nd layer solution, contributed to the increasing TVL due to the increasing market value and price increase. Thanks to Polygon’s collaboration with ETH, there are the best DeFi projects built on the ETH network, such as AAVE and CRV. This is not a challenge as ETH has users and demands due to its technical development and updates.

Moreover, DeFi teams have expanded from ETH to other EVM compatible chains such as Polygon, and there are projects that started in BSC before switching to ETH instead.

Depending on how the market’s L1, L2 ecosystems are performing, top projects such as SOL, MATIC, FTM and AVAX all led the rally in Spring 2021. The trend reversal in DeFi is all about scaling ETH. Traders create consistent demand across exchanges and buy dips until the volatility of ETH is high enough to support a price surge to the $ 3,000 level.

Finally, L2 solutions protected whales and institutions from high fees. This has supported the rising market value of ETH. At the time of writing, ETH’s market value is just over $ 330 billion. The price remained below the $ 3,000 level despite the fluctuation this spring. Traders predict that this could change in the summer of 2021.

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