Range-bound Bitcoin price opens the door for altcoins to move higher

Bitcoin remains pinned below $58,000 while Ethereum price soars to new highs and the number of ETH held on centralized exchanges falls.

Ether (ETH) took charge as a new month begins and the second-largest cryptocurrency by market capitalization rallied to a new all-time high at $3,338. This has many analysts shouting out that a new ‘altcoin season’ has commenced. Meanwhile, Bitcoin  (BTC) price is continuing to meet resistance around the $56,000 to $58,000 level. 

Data from Cointelegraph Markets and TradingView shows that since dropping to a low of $2,160 on April 25, the price of Ether has rallied 54% to a new record high at $3,324 on May 3 as Monday’s 12% spike lifted the top altcoin above the $3,300 level for the first time in history.

ETH/USDT 4-hour chart. Source: TradingView

While a majority of crypto traders are celebrating Ether’s price breakout, which has helped elevate project co-founder Vitalik Buterin to the crypto billionaire club, bearish traders are en route to heavy losses as nearly every one of the 76,000 put option contracts that are set to expire on April 7 will become worthless if Ether price manages to stay above $3,100.

And it’s not just Ether that has been performing well as of late. In the past 2 months, the altcoin market as a whole has seen its value increase 119% and flipped the 2017 peak into a new support level.

Ether HODL rates rise

According to Glassnode, an on-chain analytics firm,  the amount of Ether being held long term has been on the rise since late 2020 and this could be a contributing factor propelling the multi-month rally.

Ethereum HODL waves. Source: Glassnode

The chart above showing “Ethereum HODL waves” indicates that “coins appear to be maturing from 1-week to over 6-months old since late 2020 (blue arrows),” with the “proportion of coins aged 1-month to 6-months progressively increasing in thickness suggesting HODLing coins accumulated in the early bull market remains a favored strategy.”

Glassnode also pointed out that a large volume of Ether has been removed from exchange wallets in 2021, with 10 instances of withdrawals in excess of 200k Ether per day taking place in just 4 months as institutional demand and decentralized finance (DeFi) use grows.

Ethereum supply in smart contracts vs. balance on exchanges. Source: Glassnode

As seen on the chart above, the amount of Ether held on exchanges has been on the decline since September 2020 which coincided with a noticeable increase in the amount of Ether held in decentralized finance smart contracts.

Currently, the amount of Ether locked in smart contracts is outpacing the amount held in centralized exchange reserves.

Altcoins outpace Bitcoin for now

With Bitcoin still struggling to secure a daily close above $58,000, altcoins continue to make the case for an emerging altseason.

Daily cryptocurrency market performance. Source: Coin360

Waves (WAVES) was the breakout star of the day with its token price surging 41% to a record high at $36.41. Ethereum Classic (ETC) also rallied 15% to a new all-time high at $50.90.

After rallying 17.84% to $5,777 in the past 24-hrs, Maker (MKR) is now the top-ranked decentralized finance (DeFi) protocol with a total value locked of $10.92 trillion.

The overall cryptocurrency market cap now stands at $2.29 trillion and Bitcoin’s dominance rate is 46.6%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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DeFi tokens are oversold but revenue and TVL show traders expect a bounce

The pullback in the value of Yearn.finance and Aave signals that the DeFi market may be oversold but increasing revenues of the top projects suggests otherwise.

Over the last month the crypto market has seen a significant amount of volatility as a 6-month altcoin bull market abruptly came to an end with the most recent Bitcoin (BTC) price rejection at $12,000.

At the same time, the DeFi sector saw an amazing run as the total value locked in DeFi platforms surged above $10 billion but at the time of writing the sector is in the midst of a mild correction.

DeFi index daily, weekly, monthly gains. Source: Messari.io

DeFi index daily, weekly, monthly gains. Source: Messari.io

As reported by Cointelegrah, when Bitcoin (BTC) and Ether (ETH) started to pull back in late September, DeFi tokens crashed in tandem. Then U.S. President Donald Trump’s unexpected COVID-19 diagnosis put additional pressure on the DeFi market.

Despite this, Maker (MKR), Uniswap (UNI), Yearn.finance (YFI), and other decentralized finance (DeFi) tokens saw their values plunge in the past two weeks. Yet, various data points show that the fundamentals of major DeFi tokens remain strong.

Most notably, Maker, Uniswap, and Aave saw their revenues spike by 130% to 440% within the past 30 days and this occurred as the prices of their underlying tokens fell substantially.

Major DeFi tokens may be oversold

It is difficult to measure the value of DeFi projects based on fixed metrics because each is structurally different but the two most widely utilized metrics are revenue and total value locked (TVL).

Revenues show how much capital a DeFi project is making from their products and it is an efficient metric for gauging general user demand and market sentiment.

The TVL shows how much capital is locked in the DeFi protocol, typically demonstrating investor confidence along with the project’s share of the market. TVL is also loosely associated with the liquidity and volume of the various staking pools.

Revenue change versus token price change of major DeFi networks. Source: Twitter.com

Revenue change versus token price change of major DeFi networks. Source: Twitter.com

As shown in the chart above, in the past 30 days the revenues of major DeFi protocols soared. Yet, the price of the underlying DeFi tokens plunged by 20% to 82%. For example, Maker dropped by 24% in the last 30 days but in the same period it recorded a 449% increase in revenue.

If a project’s TVL is stable and the revenues are increasing, a major price plunge likely signifies extreme caution in the DeFi market. Similarly, Uniswap and Aave recorded a steep price slump, while they both recorded over a 235% increase in revenue.

Jeff Dorman, the chief investment officer at Arca, explained that fundamentals do not necessarily move with the price. Citing the revenue change of DeFi protocols in contrast to token prices, Dorman wrote:

“Price and fundamentals don’t always move the way you’d think. DeFi is a great example this month. According to data from Messari and Token Terminal, here are 30-day changes in Revenue for select DeFi protocols, compared to their 30-day changes in Price.”

In the medium term, Dorman emphasized that it is the “perfect” setup for value investors. It shows which projects have fundamentals that outweigh the recent price wreck from the crypto market correction. He noted:

“Not all tokens are created equal. Some accrue no economic value regardless of earnings, while others directly accrue value when earnings increase. This is a perfect setup for value investors — the sector is collectively dumping, but there will be long-term winners and losers.”

TVL and daily DEX users continues to rise

On-chain data from Digital Assets Data indicate that the TVL of the DeFi market remains relatively unchanged. While most DeFi tokens dropped by 30% to 50%, the TVL has remained above $10 billion.

Total value locked in DeFi. Source: Digital Assets Data

Total value locked in DeFi. Source: Digital Assets Data

Yearn.finance, for instance, saw its native YFI token drop by 44% within five days and the digital asset is currently 56% down from its peak.

Despite this startling decline, investors and analysts remain strongly bullish on the project and earlier this week the Yearn.finance team revealed that it plans to release new stablecoin vaults.

Further proof that token price is not a reflection of a project’s viability comes from Defipulse data showing Yearn.finance with a TVL of around $700 million, a figure which is close to its TVL in August when the price was much higher.

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Makerdao Vote to Not Compensate Black Thursday Victims Receives Harsh Criticism

Large Makerdao holders decided not to compensate the victims that were liquidated during the unexpected flash crash that took place on March 12, otherwise known as ‘Black Thursday.’ An aggregate total of 38 votes was cast and more than 65% of the governance portal participants voted for zero compensation. The day after March 12, otherwise […]

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Total Value Locked in Defi Surpasses $4 Billion, ETH Up Over 70% Last 30-Days

Total Value Locked in Defi Surpasses $4 Billion, ETH Up Over 70% Last 30-DaysStatistics show that the decentralized finance (defi) economy has grown massively this year as the total value locked (TVL) in defi recently surpassed $4 billion. Between dex platforms, derivatives, stablecoins, lending, and non-fungible asset creation the second quarter of 2020 has propelled the Ethereum network to new heights. Decentralized finance (defi) is a term used […]

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Ethereum’s 2020 Defi Boom Doubles Active Ether Addresses, But Fees Skyrocket

Ethereum's 2020 Defi Boom Doubles Active Ether Addresses, But Fees SkyrocketThe number of active Ethereum addresses has grown aggressively in 2020 because of the decentralized finance (defi) boom. Active Ethereum addresses doubled in size leaving networks like Tron, Cardano, and EOS in the dust. There’s a lot happening in the world of decentralized finance (defi) with things like synthetic bitcoin (WBTC), stablecoins, yield farming, decentralized […]

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