Analysis & Opinions

DeFi Catches up to Ethereum 2.0’s Pace: Weekly Market Review by TokenInsight

Markets usually show better performances around the end of the year, especially as good news tends to be released in abundance during this period. Is that really true? This week, to say that the apparent performance of the crypto market supports that this view may seem pretty insightful. Ethereum’s 2.0 Beacon Chain was launched on Dec. 1, while DeFi projects are busy merging: yearn.finance announced five mergers in succession in the past few weeks. We are witnessing the youthful crypto market’s prosperity and maturity. 

Fluctuation Doesn’t Stop the Bull Market 

Ethereum’s 2.0 Beacon Chain was launched on Tuesday, Dec. 1. As we all know, there is still a long way to go before the vast project finishes its transfer from the original Ethereum to its new residence. The uncertainty of risk caused by this long-term transformation may be the reason for the transitory fall in ETH price and trading volume around the launching time.  

Besides, Ethereum’s price remained at a relatively low range for the past several months, hence the recent surge gave some investors considerable profits. We can’t blame people for selling their ETH at a high point, can we?

The highest price of ETH this week reached $628, and the lowest price was $496. Fluctuation has widened the price range fluctuation to nearly $130 in a single week. 

ETH price in the last 7 days, chart from 9pm EST, Dec. 3. Source: tokeninsight.com

However, investors are still keeping a solid positive view in Ethereum: although the fluctuation of ETH price has increased, it is still standing above $500 in the last 2 weeks. 

Aside from that, the recent implied volatility of Ethereum perpetuals is higher than its realized volatility, and ETH ATM Implied volatility is also at a high position compared with last month.

ETHUSD implied volatility vs realized volatility in the last 30 days as of Dec. 3. Source: skew.com

The upsurge in perpetual trading after ETH 2.0’s launch could be a good signal from investors. On Dec. 2, the trading volume of perpetual contracts reached this week’s peak of $3.1 billion, all which reflects investors’ optimism.

TH  Perpetual trading volume in the last 7 days, chart from 9pm EST, Dec. 3.
 Source: tokeninsight.com

Can an ‘All-Time High’ Strengthen Growth?

Bitcoin succeeded in setting a new peak: $19,785, which surmounts the old all-time-high position seen nearly three years ago in 2017. Bitcoin has proved itself that it is NOT a TULIP. The price of Bitcoin has stabilized above $18,000 after this Monday, and the weekly average price is keeping higher than $18,600. So, what is the next step?

BTC & ETH price in the last 30 days, chart from 9pm EST, Dec. 3. Source: tokeninsight.com
BTC perpetual trading volume in the last 7 days, chart from 9pm EST, Dec. 3.
 Source: tokeninsight.com
Trading volume summary info in the last 7 days, chart from 9pm EST, Dec. 3. Source: tokeninsight.com

Compared with the other top three, XRP performed the best last month. Relying on big institutions’ endorsements, the price of XRP more than doubled, but its rhythm is still correlated with other main cryptos.

 4 main cryptocurrencies‘ price increase & correlation in the last 30 days, chart from 9pm EST, Dec. 3. Source: tokeninsight.com

Rainy Season Is Over

Starting from October, due to the rainy season, cheap hydroelectricity supply for Bitcoin mining stopped gradually in the southwest of China. That is the reason we saw a decrease in Bitcoin hashing power. 

Clues from Bitcoin’s total hash rate could lead us to understand that: after mid-October, the total hash rate fell about a quarter through the beginning of November. A reasonable explanation is that the now end of the rainy season has forced miners to close their mining facilities and move them to other places for cheaper electricity. The transition period caused by this movement saw a reduction in hashing power.

A similar drop also happened in November, signaling the beginning of the dry season. In the last two weeks, Bitcoin’s hash rate fell from 141.076million TH/s to 130.449million TH/s on Dec. 3.

However, these small troubles have little impact on the enthusiasm of miners. Inventories of Bitcoin mining rigs had been snatched up, and machine orders are fully delayed until 2021 Q2. 

Bitcoin total hash rate (7 average) in the last 90 days as of Dec. 3. Source: blockchain.com

DeFi Sticks Close to the Bullish Momentum

Along with Andre Cronje’s frequent movement in merging other projects, DeFi communities heated back up this fall. In one week, yearn.finance merged Pickle, Cream, Cover Protocol, Akropolis, and SushiSwap. Now it seems that DeFi is the direction of the future: half of the six best week performance projects come from DeFi.

Best performance token this week as of Dec. 3, 9pm UTC. Source: coinmarketcap.com

Highlights Picked by TokenInsight

S&P Dow Jones Indices to Launch Crypto Indexes in 2021

Dec. 3, 2020, Thursday, S&P: Dow Jones Indices said that it will launch a customizable cryptocurrency indexing service in partnership with crypto data provider Lukka in 2021.

Grayscale Ethereum Trust Announces Share Split

New York, Dec. 2, 2020, Wednesday: Grayscale announced that it has declared a 9-for-1 split (the “Share Split”) of the Grayscale® Ethereum Trust (OTCQX: ETHE)  issued and outstanding common units of fractional undivided beneficial interest. 

US Lawmakers Seek to Make Stablecoins Illegal Without Federal Approval

Dec. 3, 2020, Thursday: A new bill “The Stable Act,” instigated by Democratic Party congresswoman Rashida Tlaib, introduced to Congress seeks to control the entire stablecoin industry by requiring all related activities to obtain federal approval first. 

What’s New With TokenInsight

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TokenInsight is a data and tech-driven blockchain financial company. TokenInsight provides rating service for token projects and exchanges, industry research, and data service for the industry. Come and check our latest work on www.tokeninsight.com or contact us via research@tokeninsight.com.

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