Welcome to the Ethereum Price Preview, an analysis of current and upcoming market events and how they might shape the price of ETH and the trajectory of the network.
Last week saw ETH become the dominant settlement layer in crypto, with DeFi TVL approaching $13 billion. In this piece, we’ll take a look at the recent drop in ETH market cap, as well as the various factors that may impact price action in the coming days.
Bitcoin’s Bull Run is Siphoning DeFi Users
It’s likely that the ongoing BTC bull run, which last saw prices rise above $13,800, is luring traders from DeFi to Bitcoin in the short term to capitalize.
Bitcoin’s price has made headlines for approaching the $14k mark seen in last year’s rally, and major companies have expressed confidence by investing. Jack Dorsey’s Square added 4,709 BTC to its portfolio and PayPal confirmed that it was adding crypto support in 2021, allowing customers to pay merchants in BTC, ETH, BCH, and LTC. Last week, Singapore’s largest bank also announced their plans to allow for cryptocurrency exchange.
With Bitcoin rising, other cryptocurrencies and projects have slipped. DEX volumes have declined and DeFi tokens have seen price corrections throughout the week.
Dune Analytics reports that trailing DEX volumes have declined 27% over the past 30 days. Volumes spiked on October 26 due to the Harvest Finance hack in which $34 million worth of tokens was stolen. The hacker exploited the flash-loan feature to steal reserves of USDC and USDT from the DeFi protocol’s vaults.
The attack involved artificially deflating the prices of these cryptocurrencies on Harvest Finance, and the hacker inflated Uniswap volumes for the day during the process of buying and selling cryptocurrency at these deflated prices and using these cheap tokens to repay flash loans.
The attack drove the price of Harvest’s native token down from $340 to $100. As is often the case with such incidents, the hack may also have negatively impacted the public perception of DeFi. Harvest Finance has offered a $1 million reward for the return of the stolen funds.
In other DeFi news, Yearn Finance founder Andre Cronje quietly launched a new DeFi project called Keeper Network last week. The project aims to act as a decentralized jobs platform for smart contracts, automating the execution of functions without the need to manually call them. The platform’s native token, KP3R, saw gains of over 3,600 just days after launch.
Despite this, Yearn’s YFI token dropped over the week from $13,800 to $11,700 due to selling pressure resulting from compressed yields in DeFi and yield farming tokens falling in value. Other tokens like AAVE, REN, and UNI have fallen over 10% in the last week, while LINK and COMP proved more resilient.
In general, the DeFi boom has seen a sudden pause since our last Ethereum Price Preview.
The total value locked in the ecosystem has crept down from $13 billion to $11.6 following a slight ETH price correction, and Uniswap remains dominant with $2.74 TVL compared to Maker’s $2 billion. Investors are likely more wary of price corrections than in earlier months, and DeFi tokens are down 50% since September.
ETH 2 Launch Date Uncertain
Ethereum Foundation researcher and de facto ETH 2 spokesperson Danny Ryan has stated on the Bankless podcast that the deposit contract for ETH 2 is not ready due to a smart contract audit that is still pending. He stated that the contract is likely going to launch several weeks before the genesis block for ETH 2.
The contract was initially slated for release last week, which would have put the ETH 2 launch date in late November, but this now seems unlikely. Ryan emphasised the need for caution, saying “given how critical this library is, and given that, if there is a fundamental error in this library we could [really mess things up] in terms of genesis deposits, that is the blocker.”
The Taipei Ethereum meetup is on November 5, featuring Hakka Finance’s Ping Chen. Roughly 20 attendees are registered so far, and discussion will revolve around DApp development and p2p messaging using blockchain technology. Oskar Thoren of Vac, and formerly of Status, will also be a featured speaker.
Ethereum Malaysia is hosting the Decentralized Nodes & Validating on ETH2 with DAppNode event on November 5. The event aims to educate attendees on how to be an ETH 2 validator, as well as on blockchain infrastructure in general.
DeFi Lab is hosting the Spanish-language event called 21 pasos para adentrarte en la Token Economía. The event is an introduction into Bitcoin and the token economy in general, and will delve into the nature of Bitcoin and how to invest. Guillermo Abellán, a corporate executive within the Bancor Santander family of companies, will lead the discussion.
TruffleCon, a two-day event organized by Truffle Suite, will take place from November 7 – 8. Guest speakers include Alberto Viera, Developer Relations Manager at PureStake, as well as representatives from bloXroute Labs, Matter Labs, The Giving Block, Gnosis, and many more.
Ethereum Bogota is hosting the Decentralized autonomous organizations: Las organizaciones del futuro meetup, a Spanish-language event which will answer questions asked in advance on the group’s social media accounts.