Every week, IntoTheBlock brings you on-chain analysis of top news stories in the crypto space.
Chainlink Blasts to All-Time Highs Across Multiple Metrics
Following several integrations with high-profile partners such as China’s Blockchain Service Network, decentralized oracles solution Chainlink (LINK) has been hitting all-time-highs throughout the last week. The recent price increase — where LINK reached as high as $8.53 — led it to enter CoinMarketCap’s top 10 tokens. Moreover, having increased by over 350% year-to-date, LINK has reached a market cap of $2.78 billion at the time of writing.
As covered in CoinDesk, Chainlink’s recent price action led its Google searches to hit an all-time-high, which can be seen in the image below:
Along with the spike in search trends, we have also seen Chainlink hit all-time highs in several on-chain metrics. For instance, we have observed a wave of new money enter Chainlink. Using IntoTheBlock’s Traders indicator, we can track that the number of addresses with a holding period of less than a month has also increased to all-time highs. As can be seen in the image below, the number of addresses with a holding period shorter than 30 days has quadrupled compared to levels seen at the beginning of the year.
Furthermore, the volume held by trader addresses has more than doubled, reaching 46.6 million LINK versus 19.8 million LINK at the beginning of the year. This increase is even greater in dollar terms: the dollar volume held by traders has increased from approximately $35 million to over $370 million within seven months.
Finally, the number of daily active addresses using LINK has also, perhaps unsurprisingly, hit an all-time high. On July 13, over 14,000 addresses used LINK as can be seen in the image below:
With so many new highs being reached by LINK, it is no wonder that the Chainlink community has been so euphoric as of recently. That being said, such parabolic price action should be taken with caution. While LINK’s current momentum may continue short-term, large spikes like this do tend to be followed by large corrections. This is not investment advice, but as Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.”
Bitcoin Mining Difficulty Breaks All-Time High
Speaking of all-time highs, Bitcoin recently hit one as well: although probably not in the metric most people in crypto would like it to. Bitcoin’s hash rate — or the aggregate computational power provided by miners to secure the network — reached a high weekly average of 124.6 million terahashes per second.
Following Bitcoin’s third halving, many expected the hash rate to drop as miners became less profitable due to the mining reward decrease. While it did drop 30% shortly after the halving, miners joined the network again, pushing hash rate to new highs. Along with the increase in hash rate, mining difficulty also reached a new high of 17.3 trillion terahashes, as reported by Cointelegraph.
While hash rate and mining difficulty may be technical terms hard for the average user to understand, it is important to know that their increase is positive with regards to Bitcoin’s security as it is now more expensive than ever for someone to attempt a 51% attack over the network. On the other hand, though, the increasing mining difficulty is likely to lead to greater concentration among miners as small miners may be operating at a loss given the reward halving and high difficulty.
Aave Introduces Undercollateralized Loans
Decentralized lending protocol Aave has been on a tear this year. Having increased its value locked by 60x and LEND’s market cap by over 20x year-to-date, Aave has earned a spot amongst the top DeFi protocols.
Since rebranding from ETHLend to Aave, the protocol has consistently brought innovative solutions to the DeFi space starting with flash loans and more recently undercollateralized loans through credit delegation, as covered by The Block. Additionally, the Aave team is currently working on a protocol upgrade that will grant governance rights to stakers, akin to Kyber’s recently deployed Katalyst upgrade.
Following the pattern of all-time-highs covered in this week’s edition, LEND also hit one for large transaction volume. IntoTheBlock’s large transaction volume indicator calculates the aggregate volume transferred in transactions with a value greater than $100,000, pointing to institutional or whale transfers.
LEND’s large transaction volume hit an all-time high of $26 million on June 18. This is more than double the previous all-time high of $12 million recorded on January 8, 2018, which coincided with the peak of the 2017/18 bubble. Therefore, on-chain data points to institutional interest picking up for Aave, as also evidenced by venture capital firm ParaFi’s recent $4.5 million investment.
While large transaction volume peaked on June 18, it has since dropped despite the price still rising. This signals the likelihood of the most recent extension of the LEND rally being driven by retail investors following its 2,000%+ price appreciation.
Moreover, on-chain activity shows that addresses have been either selling or transferring out their tokens despite (or because of) the price increases. As seen in the image below, the number of total addresses with a balance of LEND tokens has been decreasing throughout most of the year, accelerating throughout late June.
While the number of holders of a token generally increases along with price, the graph above points to LEND users selling or transferring out their tokens throughout the year. Despite the significant drop in holders seen in late June, though, the trend appears to be reversing throughout July, so far possibly due to retail users following the trend towards DeFi tokens.
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