Most investors might turn their eyes to a predominant cryptocurrency when looking to invest in the space, but it’s important to understand the other market leaders. Unlike early crypto projects, platforms such as Ethereum (ETH) have prioritized decentralized innovation in order to stand out from the competition. As cryptocurrency finds its place on the global stage, it may be the ETH price that best reflects the state of decentralized finance (DeFi).

Ethereum as an Indicator of DeFi Demand

Where early crypto projects stand out for their price, subsequent crypto projects have made an effort to distinguish themselves. Whether through innovative features, faster exchanges or a community-based approach, DeFi has potentially grown far beyond what early innovators are capable of providing. Ethereum, for instance, is more than just its native token — it generally acts as a backbone for real-world blockchain applications in DeFi.

For most institutions and investors, the innovative appeal of Ethereum and similar projects is not enough to draw their sights away from an investment in whichever cryptocurrency leads the market. That said, they may still benefit from paying attention to changes in the ETH price. In many ways, the second-largest cryptocurrency may act as an indicator of network demand and utility in crypto. The ETH price tends to reflect global demand for Ethereum’s blockchain technology, thereby signaling an increase in DeFi lending, staking and cross-border payment adoption.

A Driver of Blockchain Integration

Those who focus solely on a predominant cryptocurrency might not recognize that certain changes in the cryptocurrency’s price may be a result of blockchain innovators adopting crypto through Ethereum. Sometimes, an increase in the ETH price parallels increased activity on layer 2 networks and in decentralized application (dApp) ecosystems — key drivers in crypto innovation. For example, Ethereum has released a new update that potentially enhances its platform and raises the max stake to 2,048 ETH.

“Software developers are readying the Ethereum blockchain for yet another upgrade that aims to make the network more competitive with upstart rivals such as Solana,” Olga Kharif wrote in an article for Bloomberg. “The so-called Pectra update scheduled for May 7 aims to cut transaction costs, reduce network traffic and make it easier for users to accomplish more complex tasks using digital wallets on the most widely commercially used blockchain.”

Shifts in the Price of Ethereum

While these changes have, so far, done little to bolster the cryptocurrency’s price, Ethereum is generally positioning itself to remain a blockchain leader. Currently, the cryptocurrency is sitting at $1,825.86, up 18.55% over the past month. The past five days, however, have witnessed a mild decline overall, and the cryptocurrency seems to still be recovering from a significant decline.

“According to the data,” a NewsBTC article read, “fewer trades are being conducted and…the pace of decline in volume is slowing. While a declining spot volume may traditionally be viewed as a sign of reduced investor interest or weak momentum, [crypto analyst] Darkfost interprets it differently…. He suggests that a decline in spot volume during a downward trend can act as a stabilizing force.”

Ethereum and Mainstream Discourse

Whatever the immediate future of Ethereum may be, the discourse that changes in software and trade volume create may reflect the impact of the ETH price on the mainstream. Alongside other leading cryptocurrencies, Ethereum is featured in finance apps, news stories and TV broadcasts. As a platform for decentralized finance, an increase in attention toward the ETH price also potentially drives attention to Ethereum itself, and the world of cryptocurrency.

Staying Ahead of Crypto Market Interest

By tracking the price of Ethereum, investors may be able to stay ahead of market interest in decentralized finance platforms and cryptocurrency as a whole. Though changes in the price of whichever cryptocurrency leads the market tend to reflect general shifts in the world of crypto, changes in the price of Ethereum may reflect a more particular shift in attention to decentralized finance. For this reason, it may be important for crypto investors to keep an eye on the ETH price.

This content is for educational purposes only and is not to be used as investment advice. As with all investments, there is risk, and the past performance of a particular asset class does not guarantee any future performance. Please consult a finance professional for financial advice. The views, thoughts and opinions expressed in this contributor content belong solely to the contributor and do not represent the views of Lee Enterprises.

Lee Enterprises newsroom and editorial were not involved in the creation of this content.