Ethereum Going to New Records
The bull wakes up and opens a new cyclical phase leading DeFi's TVL to new records. NFT downsized in trades but still a hot topic.
"The invention of blockchain gives even more power to people and challenges the insidious culture of ownership and control.The technology behind bitcoin breaks Orwell's 'maxim' - a simple, democratic weapon that gives claws to the weak"
Julian Assange
If last year at this time we were cleaning up the mess of a downturn that under the dust left many doubts about what could be the future not only of Bitcoin but of the entire cryptocurrency sector that was not proving to be an alternative financial asset (as it was often described), this year the situation has definitely changed. For several weeks now, not a day goes by that is not marked by the release of some relevant news. News that once would have given far more obvious shocks to prices, while today we have the feeling that they serve to strengthen a market that is becoming increasingly mature. This maturation has allowed bitcoin to close the last month with a gain of 30% which, added to that of January and February, results in a performance of over 100% in three months. Ethereum has done even better, reaching new all-time highs of $2,100 for the first time in its history and growing 185% since the beginning of the year. But it's not just about prices. Signs of strong vitality are also coming from network metrics such as hashrate (150.3 Exahash) and difficulty (19.8T), both at all-time highs.
A recent Chainalysis study explained that of the more than 18.7 million bitcoin mined to date, excluding those considered lost or stuck on historical wallets, estimated at around 4.5 million, more than 8.4 million have a purchase price below $10,000. There are 5.6 million bitcoin with a purchase price above $30,000 of which 1.6 million are above $50,000. These are key levels that are also reflected in the technical analysis shown later in this newsletter.
Decentralized finance also had an interesting week with the total value returning to new all-time highs. The NFT market is shrinking, with trading down from last weeks' levels but with interest remaining high in a world that is in turmoil and has no intention of stopping.
Decentralized Finance
With $173.3 billion in trades on decentralized exchanges (DEX), March ended the month with the second-highest peak ever, in terms of volume, behind February, closing $5 billion higher. Last year, March accumulated a total of $1.1 billion, the second-highest level in the first half of the year behind only June with $1.9 billion. In one year, the trading volume on DEXs has increased 160 times. This number is a snapshot of the vertical growth of a sector like decentralized finance, a sector that is starting to be observed with concern by traditional finance, which is becoming increasingly interested in entering a sector that was previously unknown and mocked. If a client were to go to a bank today and request to invest in a structured product - a practice currently reserved for institutional clients only (whereas in DeFi it is now possible even with small amounts) - he would certainly be laughed at.Â
The total volume traded on DEXs over the past week has remained stable at over $12 billion.
Uniswap's decentralized exchange strengthened its leadership by increasing its trading volume by over $400 million ($7.6B) and strengthening its market share from 60% to 62%.
SushiSwap suffered, dropping from $2B to $1.7B in volume traded over the past seven days with its market share dropping to 14.3% from 16.8%.
Curve, the third-largest DEX by usage, remains unaffected.
The record increase in the price of Ethereum, the token most used as collateral in DeFi projects, and the new record for the number of Ether locked in the various decentralized finance protocols (9.7 million), contribute to the total value locked (TVL) rising to over $47.5 billion.
The prices of governance tokens in decentralized projects are on the rise, with double-digit weekly gains, except for PancakeSwap, which regained its composure after last week's sharp rise, in contrast to its competitors.Â
Non-Fungible Token
A week of adjustment for the Non-Fungible-Token sector. The number of trades, and thus of the counter value, decreases. The NBA Top Shot project, the number one in terms of users and exchanges, has halved its trading volume. The highest trade of the week was the image of the zombie No. 3609, which fetched 375 ETH, or $631,936, from the CryptoPunk series. The marketplaces of F1 Delta Time and Alien Worlds, projects launched in recent weeks, went against the trend. Alien Worlds, a recently re-launched project which raised over $2 million through the private sale of the utility token Trilium (TLM), with over 3,000 listings in the last week is the second largest marketplace in terms of the number of users, behind only NBA Top Shot which, despite the weekly halving, still has over 46.2 thousand users.   Â
5 hottest DeFi news of the week
Technical Analysis
Bitcoin (BTC)
The return of prices to the 60,000 USD area brought them back to close to the all-time highs of mid-March and pushed the market cap above 1.1 trillion, its highest level ever. The rise above 59,000 USD marks the end of the quarterly cycle which began in mid-December. A cyclical end characterized by a retracement that stopped at 18% opening two hypotheses:
1) a quarterly cycle still present which postpones the closure to the coming weeks;
2) a new annual cycle to be identified with precision in the coming months which pushes prices upwards making the closures of monthly cycles irrelevant.
A condition similar to what happened in 2017 when all the downward movements were reabsorbed in a short time loading the next push and recording new highs. Already next week it will be important to understand the holding, or not, of the 59,000 USD confirming the health and effectiveness of the uptrend that has almost totally absorbed the decline of the second part of March.
BTC Options
The area of the historical highs of mid-March is the strike most used by professional traders to protect bullish positions. From the intersection of open interest data on both derivatives (futures+options), positions are growing, recording new all-time highs. This makes the ratio between Put (downward) and Call (upward) options rise to 1:4, highlighting a resistance not only technical but also operational selected by operators as a watershed level that will decide the fate of the price in the coming weeks.Â
The areas to be monitored are: on the upside 60,500-61,000 USD, while on the downside the first levels are above 56,000 USD. Price movements beyond the indicated areas would cause repositioning of the hedges - usually used with futures - and cause very volatile price excursions.
Ethereum (ETH)
The surpassing of the previous highs of February at 2,035 USD pushes prices to new all-time highs reaching in a few hours the first target in the 2,115 USD area decreeing the end of the previous quarterly cycle started in late December and the beginning of a new cycle that identifies the next target in the 2,630 USD area. To obtain definitive confirmation of being inside the new quarterly cycle that will accompany us until the beginning of summer, it will be better to wait for confirmations in the next 10-15 days. For the moment it is useful to follow the current phase of strength accompanied by the return of volumes even if not yet entirely satisfactory. The previous daily resistance of 2,000 USD now becomes a decisive support which should protect in case of reversals.
ETH Options
The upside hedges previously positioned in the 1,850-1,900 USD area, as highlighted in the previous report, have been cancelled. The rise above the strikes identified and used by professional traders as insurance made them cover their losses by resorting to futures purchases, supporting the rise which, as hypothesized, quickly sent prices to new all-time highs for the price of Ethereum. In fact, when analyzing the Open Interest of both derivatives, while options are still at their lowest levels of the past month due to last week's monthly and quarterly closings, futures are back at an all-time high - over $7 billion in aggregate volume - showing new futures positions being opened to the upside. In the event of a reversal of the trend, downwards monitor the area 1,850-1,900 USD and lower 1,550 USD in the event of sudden collapses, although unlikely at this stage of a possible start of a new quarterly cycle, but it is always better to remain ready and vigilant.   Â
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