As most readers are likely aware, Ethereum and Bitcoin faced a flash crash on the evening of Aug. 1. In the span of just about five minutes, BTC plunged $1,650 from $12,200 while Ethereum crashed by approximately $90 from its two-year highs at $415. It was a move that liquidated dozens of millions, even hundreds of millions, worth of futures positions.
Both cryptocurrencies have since seen respectable bounces. Bitcoin now trades for $11,200 and Ethereum $385 as per CryptoSlate market data.
This means that even despite the worst crash since “Black Thursday” on Mar. 13, Ethereum is still up by 24.7 percent in the past seven days and just around 50 percent in the past ten days.
This extreme strength in the price of Ethereum has caught many traders off guard as they wonder what caused this move.
Qiao Wang, a cryptocurrency trader who formerly worked as the head of product at Messari, recently attempted to get to the bottom of this question by asking Twitter about what caused the move.
Crypto Twitter tries to figure out what caused Ethereum to explode higher
49 percent of Qiao’s followers, or at least the 1,014 followers that responded, believe that the biggest catalyst behind ETH’s recent price action is the narrative that “Everything is happening on Ethereum.”
This is a narrative that has been often discussed by the blockchain’s proponents, who argue that ETH is a form of money and that Ethereum is a multi-faceted tool for countless applications.
Andrew Keys, a former executive at ConsenSys, wrote the following in a blog post published earlier this year:
“We will be able to trustlesstly and digitally represent fiat, gold, software licenses, equity, debt, derivatives, loyalty points, reputation ratings, and much much more that we can’t even conceive of yet. That’s a market opportunity estimated at well over $80 trillion dollars. Bitcoin is a singular use case. Comparatively, Ethereum has infinite use cases.”
The second-most popular response to the poll about Ethereum’s price action at 24.2 percent of the votes is the “correlation to the rest of the market.” It could be contested that this is an incorrect narrative as it is actually ETH that is leading Bitcoin and other digital assets higher.
The two other responses, which garnered relatively few likes between themselves, are “ETH 2.0 coming soon” and “People buying ETH in order to use it for gas.”
What’s primarily causing the price of ETH to rise?
1. People buy ETH in order to use it for gas
2. ETH 2.0 coming soon
3. The “Everything is happening on Ethereum” narrative
4. Correlation to the rest of the market (positive to BTC and negative to USD)
— Qiao Wang (@QWQiao) August 1, 2020
A mix of everything?
Although a near-majority of respondents see the “Everything is happening on Ethereum” narrative as the one that is most likely driving the price surge, trader “Ceteris Paribus” postulated that it’s a mix of everything:
“all of the above, but strongest driver positive market sentiment across the board.”
Ethereum, currently ranked #2 by market cap, is down 3.73% over the past 24 hours. ETH has a market cap of $42.44B with a 24 hour volume of $18.63B.