Cryptocurrencies

Ethereum (ETH) price rose 5.5% on May 17, approaching $3,100 for the first time.

The price of Ethereum (ETH) rose 5.5% on May 17, approaching $3,100 for the first time in 10 days. Analysts attributed this rise to a decline in demand for fixed income instruments after stagnant retail sales data in the United States in April. This data increased market expectations of a possible interest rate cut by the US Federal Reserve to boost the economy.

Expansionary measures taken by a central bank are usually seen as bullish for risk markets, whether due to increased money supply or lower credit costs for businesses and individuals. Investors sought exposure to scarce assets, including cryptocurrencies, which took gold to $2,410, just 0.8% below its all-time high.

The court ruling gave ethereum investors a boost of confidence

Ethereum’s rise was also driven by an indictment issued by the US Department of Justice on May 15. The indictment charged two people with wire fraud and money laundering through manipulation of the Ethereum blockchain. “Ethereum is a decentralized blockchain (…) without the need for a trusted intermediary,” the document stated, adding: “There is no central actor managing the Ethereum network.”

In addition, the court noted that Ethereum smart contracts allow transactions to take place without a trusted intermediary. These statements boosted the confidence of Ethereum investors, especially after the US Securities and Exchange Commission issued a Wales Notice to trading platform Robinhood on May 4 over alleged securities violations related to cryptocurrency listings and custody operations.

According to Orlando Cosmi, founder and CEO of Lexproof, such a ruling contradicts regulatory bodies’ classification of Ethereum as a security, “where there would be no management or entrepreneurial efforts by others.” While this analysis doesn’t change the odds of approval for US exchange-traded funds (ETFs), it certainly lifts investor sentiment.

The SEC is expected to issue its final ruling on VanEck’s spot Ether ETF application on March 23 and rule on the conversion of Grayscale’s ETHE fund by June 18. Although analysts expect the odds of approval to be less than 35%, regulators’ argument for classifying Ethereum as a currency is strong. The security instrument weakened, which may have contributed to the rally above $3,050 on May 17.

Anatoly Yakovenko, co-founder of Solana, praised the security of the Ethereum network, highlighting how impossible it is to orchestrate an “invalid state transition or double-spending attack.” In a post dated May 17, Yakovenko added that expanding Layer 2 reduced costs without compromising security due to the large number of validators and operators in the network.

In short, investors realized that any setbacks Ethereum faced, including its high transaction fees and lackluster efforts to increase scalability, were actually decisions that prioritized security and decentralization. Meanwhile, competitors Solana and BNB Chain have opted for solutions that allow for higher processing power, regardless of the advantages of increased reliance on fewer entities.

The dominance of the Ethereum network remains undisputed

Ethereum’s strength becomes clear when analyzing its dominance in the decentralized application (DApp) business. The growth of layer-two solutions like Base, which has quickly gained traction due to its low fees and integration with the largest U.S. cryptocurrency exchange, Coinbase, enhances Ethereum’s ability to become a global settlement layer.

Top Blockchains Ranked by 30-Day Dapps Volumes, in USD. Source: Dab Radar

Ethereum’s DApp volume of $181.5 billion over 30 days is seven times larger than its direct competitor, BNB Chain. Importantly, this volume decreased by only 3% compared to the previous month, while the BNB and Solana chain saw volume declines of 52% and 41%, respectively.

Related: The US Senate approves a resolution repealing cryptocurrency rules imposed by the Securities and Exchange Commission on banks

An analysis of unique active addresses handling decentralized applications yields similar results, with Ethereum rising 3% in 30 days while BNB and Solana Chain faced sharp declines. Highlights in the Ethereum network include Balancer, which saw a 34% increase in volume in 30 days, Morpho Optimizers, which gained 80%, and DODO, with a 61% increase in volume.

In essence, even if the odds of an ETF being approved in the US remain low, investors realize that the network’s dominance in the DApp ecosystem remains unaffected. This realization contributed to the rise in Ethereum prices on May 17.

This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.

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