Analysts say that Ethereum (ETH) is poised to become the first cryptocurrency asset surpassing the $1 trillion dollar market valuation. If that happens, the crypto needs to surge 1,000%.
Despite the not so good market performance the previous year, ETH remains to be among the best performing crypto asset, which rallied to $160 as of today.
Ethereum might be performing well these days, and many investors expect that it will surge higher. In fact, analysts predict that the value of ETH will reach $1 trillion levels. For those who are not aware, if the crypto asset will surge to trillion-dollar market capitalization, its price level would be more than $9,000.
Meanwhile, it was reported that DeFi successfully soared to its all-time high, making it reached the $800M mark in total value locked in US Dollars. As the ETH’s price poorly performed in the previous two years, the DeFi product growth continues to cover heights.
If you’ll remember, ETH hosts DeFi apps. So, based on the current market performance of DeFi products, many hope that it will drive the crypto to break the $1 trillion dollar mark.
How Could Possible ETH Hit $1 Trillion?
While the second-largest crypto asset is set to target the global market, it can possibly hit the $1 trillion US Dollar market capitalization.
The possibility of hitting the for-market capitalization lies to DeFi. It refers to the decentralized platforms or applications, allowing investors to use traditional financial services in exchange for using ETH as collateral. In short, they can make payments, trade derivatives, receive loans, and use other peer-to-peer financial activities without the help of centralized entities.
Lucas Campbell of DeFi Rate laid out a case intended for the 13-digit Ethereum market capitalization. From that case, the ETH is considered to be a trustless economic bandwidth, which cannot be replaced by another crypto asset. Meaning, Ethereum tends to be a reserve currency designed for a decentralized finance ecosystem.
So far, the protocols of DeFi are consuming the second-largest 3% of the total economic bandwidth of ETH. As the demand for DeFi products continues to increase, it will require larger Ethereum reserves. Not only that, there is a multi-trillion-dollar market that is addressed for Ethereum, including derivatives, financial services, and money.
The Correlation Between ETH’s Price and DeFi Products Growth
The DeFi product growth has a direct connection with the ETH’s price. As mentioned above, there’s an existing massive network of traditional finance money that has potential application to DeFi products. In such a situation, ETH has a huge potential for hitting the $1 trillion USD market cap in the near term, especially if a portion of the traditional finance money is being transferred to the Decentralized Finance platform.
In the case that a stable coin that is collateralized using Ethereum and other economic bandwidths on the Ethereum network breaks the $1B market capitalization this year, then the ETH’s total value necessary to be locked will surge by $15.34% of the total ETH’s value. After that, everything else will remain stable.