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.
Following a rocky week for the price of Ethereum, we take a look at the risks and fundamentals that may be impacting Ethereum price for the week ahead.
SushiSwap Crash Shakes ETH But Markets Remain Bullish
In the last two weeks, SushiSwap, a fork of the Uniswap exchange, siphoned hundreds of millions of dollars from its rival in DeFi’s first “vampire attack”. Anonymously created by a pseudonym known as “Chef Nomi”, the exchange saw a 70% drop in value last week after its creator dumped $14 million of SUSHI on the market, sending huge shockwaves across Ethereum.
The SushiSwap crash certainly played a factor in the subsequent 30% price drop seen in ETH, although the markets have since recovered significantly. Another event that may have rattled confidence in the DeFi boom came from an exploit in the Soft Yearn project, which allowed a user to turn $200 into $250,000 when the price spiked due to a software glitch.
Despite the FUD (fear, uncertainty, doubt) created by the DeFi hiccups, fundamentals in the market remain healthy. The Ethereum Foundation announced $3.8 million in new grants to further network development, with funds distributed across 28 projects and dev teams working on ETH 2, community and education, cryptography and zero-knowledge proofs as well as Layer 2 solutions. The confluence of fresh funding and a boom in network activity all adds to the ongoing bullish sentiment palpable among the Ethereum community at the moment.
TVL across all DeFi platforms has increased by over 1000% since the start of the year, currently standing at $8.27 billion. It’s also worth noting that New York crypto exchange Gemini recently listed Compound, granting a major DeFi project support in one of the harshest regulatory climates in the US.
Daily trading volume remains in the green, and the MACD looks set to cross below the baseline in a bullish gesture, leading many analysts to predict upward price momentum with resistance levels remaining the same at $400, $420, $450, and $490.
Ethereum Network Activity Remains High
As DeFi continues to build momentum, network congestion and operating costs remain under pressure. Gas fees skyrocketed 70% on September 10, rising to $4.55 per transaction. Average fees have remained above two dollars for over two months, a new record.
Wrapped Bitcoin volume on the Ethereum network is approaching $1 billion in value, rising 37% over the last two weeks to hit $800 million. 2% of the entire market cap of ETH is now allotted to Bitcoin on the network. The rise of wrapped bitcoins issued on the Ethereum network has led many to question whether BTC’s own blockchain will become a thing of the past, although that day is still a ways off; BTC tokenized on Ethereum is often from a trusted source, rather than a “trustless” one, meaning major architectural changes would need to be implemented in order for products like HBTC and WBTC to truly replace Bitcoin.
Finally, ETH 2 could be due as soon as November 2020 according to Raul Jordan, an Ethereum 2 developer.
Jordan stated on September 11 that “Out of [a checklist], only a few are features, which means that we can likely perform a feature freeze by mid October, allowing us to only work on security improvements and UX before going live. If all goes well, November is still looking good for a launch from our perspective.”
The BlockLive Asia 2020 event will take place on September 14, with a strong focus on the rise of DeFi and the tokenomics behind various platforms. The event features speakers such as Lisa JY Tan, Lead Economist at Economics Design, Aavegotchi Co-Founder Jesse Johnson, and Maker Foundation’s APAC Business Development lead Doo Wan Nam among others.
Ethereum Engineering Group is hosting an event called MetaMask for Application Developers on September 16, featuring MetaMask’s Head of Product Jacob Cantele.