ETH Speculators Returning to the Market, Making Some Cautious
This time really seems to be different as Bitcoin and Ether consolidate while DeFi is enjoying another summer.
The second-largest cryptocurrency is hovering around $3,500 following its correction to $3,100 on Coinbase on Monday.
“My entire eth bull thesis was based on speculators and traders selling eth into institutional bids. Speculators and traders are returning, either sign insto bid has dried up, or degens have taken over.”
As we reported, the latest ETH rally has been primarily driven by spot buying suggested by the extremely low funding rate on ETH perpetual contracts throughout. However, during this recent pullback, a spike in rates has been recorded.
Michael Novogratz, chief executive officer of Galaxy Digital, is also calling for Ether to consolidate between $2,800 and $4,000 for a few weeks.
While price is consolidating, the network continues to grow, with transaction fees now coming at $30 million per day, compared to Bitcoin’s mere $3.35 million, as per CryptoFees.
In Q1 2021, the fees, which is network revenue, increased 200x to $1.7 billion compared to $8 billion in 1Q20, noted James Wang.
This has been the result of transaction volume surging to over $713 billion in the quarter and median transaction fee jumping to $7.63, which was just $0.06 in the first quarter of 2020. Of course, as daily active addresses increase to 607k, this is to be expected.
Decentralized finance (DeFi) is the big reason behind all of this growth as volume on DEXs jumped to $177 billion in Q1 2021, with the most popular and dominant one, Uniswap V2, also earning more in fees at $5.2 million than Bitcoin.
An increase in stablecoin supply, which are collectively ready to hit $100 billion, about 1% of Bitcoin supply on Ethereum as Wrapped Bitcoin (WBTC), and NFT art sales growing to almost $400 million are other contributors to Ethereum's success.
Things are only expected to get even more exciting for Ethereum Network with EIP 1559 ready to make Ether a “deflationary asset” by burning the fees paid in ETH. Moreover, with the growing number of ETH staked, currently more than 4.65 million, scalability coming, and the merge with ETH 2.0 to happen next year, people are bullish and calling for a flippining, ETH to replace BTC as the largest crypto asset, at least briefly.