Ethereum on the Verge of Upgrade, Expanding Its Territory

Total Cryptocurrency Market Cap Approaches 20%
DeFi Deposit Volume Also on the Rise

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] As the Ethereum upgrade approaches in September, its price has surged, increasing its share of the total cryptocurrency market capitalization. With Ethereum's dominance in the DeFi (decentralized finance) market exceeding 50%, the price rise is also driving an increase in the size of deposits.

According to CoinMarketCap, a global cryptocurrency market tracking site, as of the previous day, Ethereum accounted for 19.26% of the total cryptocurrency market capitalization. The market cap share was only 14.67% at the beginning of last month but has since shown an upward trend, even surpassing the combined share of coins outside the top 10 by market cap on the 17th of last month. Meanwhile, Bitcoin, the leading cryptocurrency, saw its market cap share decrease from 42.90% to 40.51% during the same period.

Despite the cryptocurrency market experiencing a downturn, Ethereum has shown an upward trend, increasing its market cap share. Ethereum's price, which was in the $1,090 range on the 1st of last month, rose by more than 55%, reaching the $1,690 range as of 9:30 AM on the day. This is attributed to the upcoming Merge upgrade scheduled for September 19, which transitions Ethereum's creation method from the proof-of-work (PoW) mining process, based on computer calculations, to the proof-of-stake (PoS) method, where holding Ethereum generates a certain proportion of new coins.

As Ethereum's value increased, the size of DeFi deposits also grew. According to DeFiLlama, a DeFi analytics platform, Ethereum's share in the DeFi market stood at 57.83% as of that day. In this context, the rise in Ethereum's price led to an increase in the total DeFi deposits. The total DeFi deposits, which were $55.78 billion (approximately 72.9324 trillion KRW) at the beginning of last month, surged to $67.24 billion as of the previous day. The DeFi market, which had shrunk to $53.85 billion on June 19 amid a market downturn, is showing signs of recovery thanks to the rise in Ethereum's price.

Furthermore, the amount of Ethereum held by cryptocurrency exchanges is on a declining trend, suggesting potential for further price increases. According to data from cryptocurrency analytics firm CryptoQuant, the amount of Ethereum held by exchanges decreased from 22,990,065 on the 29th of last month to 22,778,956 as of the previous day. As the holdings on exchanges decrease, selling pressure tends to lessen, which could lead to further price appreciation.