Aaron Arnold outlined three factors that will provoke a rise in the price of Ethereum.
Analyst Aaron Arnold on his YouTube channel (952 thousand subscribers) named the fundamental factors that, in his opinion, will provoke the “explosive” growth of Ethereum.
One of the key features of Arnold is the recent change to the altcoin blockchain, which resulted in the introduction of a mechanism for burning digital coins.
On August 5, the London update was released on the Ethereum network , which completely changed the mechanism for calculating transaction fees. Some of the commissions that miners previously received as a reward are now burned.
Burning tokens is the destruction of a certain number of tokens to reduce their number in circulation.
This method is used to combat inflation and increase the value of cryptocurrencies.
All coin burning operations are recorded on the blockchain as a transaction, so anyone can verify that the coins have been destroyed.
Since the activation of the update, more than 134.8 thousand Ethereum worth $ 427.5 million have been burned in the altcoin network, according to the ultrasound.money service, which tracks the destruction of coins in the altcoin network. The average burn rate per minute is 3.77 Ethereum.
The analyst believes that the second growth factor is the decline in net inflation in Ethereum.
According to Arnold, at the moment, the net inflation of altcoin in annual terms is 1.1%, while the same figure for bitcoin is at 1.75%.
Arnold recalled the multiple growth of funds blocked in the decentralized finance (DeFi) sector. In his opinion, this is the third factor that contributes to the rise in price of Ethereum.
On January 1 of this year, the volume of funds blocked in DeFi was $ 16 billion, the analyst noted. On August 30, that figure is $ 82 billion (up 412% YTD), according to DeFi Pulse.
Since the beginning of this year, Ethereum has risen in price by 328%. On August 30, altcoin is trading at $ 3.16 thousand, and its capitalization is $ 376 billion, according to CoinGecko.
In mid-May, Ethereum renewed its all-time high at around $ 4.3 thousand (an increase of 482% since the beginning of the year).
