Second Half of 3-Yr Bull Market: Ether’s Crazy Run has 90% of its Supply in Profit
This past weekend, the price of Ether went past $400 to as high as about $420, a level last seen in July 2018. This huge move has been in line with bitcoin, which surpassed $12,000 only to crash 12%, which had ETH falling back to $360. Ethereum, however, had both a bigger percentage of a move up and a move down.
These gains, meanwhile have a good majority of ETH supply in profit.
Over 90% of the circulating #ETH supply is now in a state of profit, i.e. the current price is higher compared to the price at the time the coins last moved.
Last time this we saw this level was in Feb 2018 when the $ETH price was at $925.
— glassnode (@glassnode) August 3, 2020
The unprecedented amount of volatility over the weekend saw $1.1 billion worth of futures positions of over 70,000 traders getting liquidated across all exchanges.
Almost $400 million was liquidated on both OKEx and Huobi separately, followed by $164 million on BitMEX and $86 million on Binance. Most of the liquidations, about $647 million, were from Bitcoin's futures, and $165 million of liquidations came from Ethereum.
According to Spartan Black of crypto hedge fund, The Spartan Group, the activity over the weekend has the market “entering into the second half of this three-year bull market which started in Jan 2019.”
When it comes to Ether, its rally was led by the “optimism around the impending launch of ETH2.0 phase 0 later this month,” he said.
Much anticipated ETH 2.0 will be more technically complex because it deals with validators, shared Ethereum co-founder Vitalik Buterin in an interview with Unchained podcast. He also said, “negative emission is not far from the range of possibility for Ethereum (ETH).”
Ethereum transaction fees have been skyrocketing in 2020 as the network runs at full capacity. He noted how in the last few weeks, it has been between 2000 and 5000 ETH per day, which, if expanded to a year, goes between 700,000 to 1,700,000 ETH a year, “which is higher than issuance with proof of stake.”
— CoinMetrics.io (@coinmetrics) August 1, 2020
Interestingly, 31% of all ETH gas fees come from MLMs, while USDT accounts for 96% of stablecoin gas payments, reported Binance research. Much of this can also be attributed to DeFi, and Uniswap protocol accounts for 47% of DEX gas payments.
Additionally, the massive rally in DeFi tokens over the last few months also enticed the new capital flowing into crypto, which is now rotating back into liquid large caps such as BTC and ETH. This means the small and mid-caps will suffer until Bitcoin and Ethereum run their course.
The primary reason behind Defi’s popularity is yield farming, which is lending cryptocurrency to get interest and sometimes fees, which rises significantly in response to price increases.
Thanks to these drivers, Ethereum has hit a market cap of over $43 billion, the highest level in the past two years.