The total value of assets (TVL) on the Ethereum (ETH) blockchain is now at the highest level since October 2022. The activity on the network is therefore fine. The question now is whether this means that the course of Ethereum will follow quickly.
Ethereum’s TVL reaches highest level in years
TVL is an important measure within the Defi sector and measures the total value of assets that are fixed in Smart Contracts on different platforms. On 11 February the TVLe from Ethereum reached an impressive 21.8 million ETH, which means an increase of 11% compared to the previous month. This confirms Ethereum’s leading position within the Defi sector with a market share of 52.8%. The number two, Solana, only accounts for 8.2%.
Despite the TVL increase in Ethereum, it is important to emphasize that a higher TVL does not always indicate an increased network activity. The growth can, for example, be the result of rising ETH prices or an increased use of liquid strike solutions such as Lido and Eigenlayer, which play a major role within the Ethereum ecosystem.
Income from transaction costs are falling despite increasing TVL
A worrying trend is the sharp fall in Ethereum’s income from transaction costs, which were taken by 72% in just two weeks. On 10 February, Ethereum only generated $ 8.1 million in transaction costs, which indicates a decrease in the demand for space on the blockchain and a decrease in on-chain activity. At the same time, the transaction volume fell by 37% on a monthly basis.
Although a growing TVL is often seen as a positive signal, there are currently few indicators that indicate that ETH will benefit directly. A decrease in the total transaction costs means that less ETH is being driven, which increases the inflation pressure on ETH in the long term. As a result, it is unlikely that the price of ETH will rise substantially in the short term as a result of the higher TVL.
ETH needs a convincing recapture of the level of $ 3,000 to guarantee further increases. But there is hope. The largest catalyst for a price increase currently seems to be the possible approval of ETHEEM ETFs with integrated strike options. Some analysts state that the demand for the existing ETFs is limited as long as strike yields are missing, which can discourage institutional investors. If the American SEC decides to approve this strike integration, it could give a strong boost to the ETH course.
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Source: https://newsbit.nl/ethereum-netwerk-bereikt-hoogste-waarde-in-jaren-volgt-de-koers/
