Ethereum once again shows slight upward momentum, but the price still remains below the $3,000 level. Despite price fluctuations over the past few weeks, certain structures and narratives that bolster the leading altcoin’s value remain strong, increasing the potential for a major upside.
Rising TVL Strengthens ETH Price Basis
In the dynamic cryptocurrency landscape, Ethereum Total Value Locked (TVL) is still emerging as a subtle but powerful anchor for the altcoin’s long-term price stability and the growth of its evolving ecosystem. Over the past few years, this narrative has continued, strengthening the price of ETH.
Although short-term price action will always vary based on overall market sentiment, the fundamental value of ETH is strengthened by the constant concentration of capital across the network. Milk Road, crypto and macro researcher, declared that the price of the altcoin has increasingly followed the amount of capital present on the network.
This development suggests that the valuation of ETH is becoming more structurally supported and less speculative. Therefore, the network is coming to a phase where floor prices are primarily driven by usage rather than hype.
According to the expert, if TVL develops significantly, the network economy simultaneously experiences notable growth. This implies greater liquidity, a stronger collateral base, and more sustainable demand for block space and network security.
Milk Road emphasized that non-speculative capital, such as stable coinstreasuries, real-world assets (RWA), and on-chain asset management are likely the main drivers of the TVL rise. Meanwhile, as capital from these areas continues to increase, the ETH floor also rises outside of bull markets.
However, it seems more difficult to enter bear markets. It is worth noting that the resilience of the ecosystem as a whole is strengthened when this happens, and also improves the anchoring of long-term valuation.
Why you shouldn’t be an ETH bear
After looking at the value of ETH relative to the size of the Ethereum ecosystem graphic, Emperor Osmo, data analyst and researcher, declared that being an ETH bear is not an ideal choice despite the current bearish state of the market.
Osmo’s bold statement is based on the major change in Ethereum network fees. As blockspace becomes commoditized, the expert pointed out that ETH has gone from 90% of the fees generated by layers 1 to 2%. Despite this massive change, the network continues to dominate TVL and ecosystem growth.
The chart shows that ETH trades at $353.2 billion, while the ecosystem built on top of the network trades at $330 billion, representing a 1.1x premium. According to Osmo, this trend assumes no growth, no value capture, and no inflow of cash.
At the time of writing, the Ethereum price was trading near the $3,000 mark, having recorded an increase of almost 1% in the last 24 hours. Its trading volume is moving in the opposite direction to the ETH price, falling more than 13% over the past day.
Featured image from iStock, chart from Tradingview.com
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