• The crypto market witnessed a DeFi summer in 2020, where decentralized finance applications turned Ether and Bitcoin into yield-bearing assets.
• Toward the end of 2020 and early 2021, the COVID-19-induced quantitative easing across global markets led to a mega-bull run that lasted almost a year.
• The Ethereum Merge in Sept. 2021 led to a shift to an environmentally-friendly proof-of-stake (PoS) consensus mechanism and reduced Ether inflation post-merge.
The crypto market has seen tremendous growth in recent years, with the DeFi summer of 2020 being a major highlight. During this period, decentralized finance applications such as Compound and Uniswap allowed users to turn their Ether and Bitcoin into yield-bearing assets via yield farming and liquidity mining rewards. This saw Ether’s price nearly double to $490, while the total liquidity across DeFi protocols quickly surged to $10 billion.
Toward the end of 2020 and early 2021, the global markets were heavily impacted by the COVID-19 pandemic. This led to quantitative easing across most countries, which in turn caused a mega-bull run in the crypto market that lasted almost a year. Ether’s price increased by an astonishing nine fold during this period, peaking at over $4,800.
The subsequent bear market in early 2022 brought Ether’s price back down to $800. However, a ray of hope arrived in the third quarter of the year with the introduction of the Ethereum Merge. This event marked the shift to an environmentally-friendly proof-of-stake (PoS) consensus mechanism, which also reduced Ether inflation post-merge. The Merge saw Ether’s price peak at over $2,000, though the bullish momentum quickly faded and it became a buy-the-rumor and sell-the-news event.
Now, traders are looking towards the next network upgrade, which is set to open withdrawals for stakers. This could potentially supercharge liquid staking derivatives and could have an impact on the price of Ether and staked Ether derivatives. As such, traders are closely monitoring the situation to determine how the markets might react once the upgrade is complete.