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Also at its present price stage, over $4000, and with a market capitalisation of $478 billion, Ethereum remains undervalued after the accelerated price surge. The estimated market capitalisation of global cloud infrastructure is projected to exceed $1 trillion by 2026, with ETH expected to dominate more than 80% of this market due to network impact.
While Ethereum’s growing market capitalisation has been a key driver of the price surge, it has stifled the development of DeFi ventures. While the TVL of top DeFi projects has risen, it has not yet reached the amount required for DeFi projects to have stable demand.
Though ETH’s rally is not decisive, it is one of the few. DeFi tokens that are rallying currently rank in the top 500, are less common, and have a low market capitalisation, while volatility is large. The top DeFi projects that have rallied in the last week are Fantom FTM, which has gained 13%, Avalance AVAX, which has gained nearly 25%, and LINK, which has gained nearly 20%.
While investment in Ethereum has risen, it has not decreased investment in DeFi ventures. The biggest concern is with HODLers; in the case of ETH, more than 57% of HODLers have owned the altcoin for more than a year. This, though, is not the case for DeFi ventures. Because of the short-term ROI loop, there is a comparatively limited number of HODLers who keep altcoins for more than 6 months. Institutional interest in ETH has steadily risen since the price began to rise, and this is another important element that distinguishes ETH from the top DeFi tokens.
The percentage availability of ETH in smart contracts has steadily improved. With the introduction of L2, network congestion has been visibly minimised, and the percent balance on exchanges has started to fall. This indicates a bullish mood among traders for ETH, but the balance has shifted in favour of DeFi ventures.
The above map and on-chain metrics reveal that the Ethereum rebound is dampening confidence in DeFi. Despite DeFi’s growing success and market rally, demand for projects such as CHZ, ENJ, MANA, FLOW, SUSHI, and BAKE has fluctuated through spot exchanges. Following the expected correction in the price of Ethereum, the price of DeFi could begin to rise.