Last week, we saw the crypto markets pass through various adoption milestones, from the Coinbase IPO to Binance launching Tesla stocks. This week, prices have fallen – the bearish price action has had no impact on adoption, however, with crypto making leaps and bounds in recent days.
Full Speed Ahead: ETH Adoption Continues
$1.5 trillion worth of transactions were settled on the Ethereum network in Q1 2021 alone. The figure exceeded the previous seven quarters combined, a major leap that indicates game-changing interest in and real world application of the Ethereum network.
The Ethereum gas limit increased 20% last week to 15 million and gas fees fell to weekly lows over the weekend. However, the recently-implemented Berlin hard fork made certain tasks more expensive on the network by design, and this update coupled with increased demand has seen gas fees grow overall in recent months.
Eth2 is expected to merge with the original Ethereum network by October, resulting in a combination blockchain network that keeps DApps running on the same clients that are currently in use, while handling consensus through proof of stake rather than mining.
In other news, major payment provider Venmo officially integrated crypto purchases last week, with users now able to buy ETH directly on the platform.
All-Time High, But Correction Could Be Due
Meanwhile, open interest on Ethereum has been steadily growing even as Bitcoin’s OI declines. Open interest is a way of measuring the derivatives market attached to an underlying asset, and high OI has historically preceded high levels of price volatility.
In some cases, high OI can point to the market being over-leveraged, meaning high levels of liquidations and downward price momentum could be incoming — equally, however, price can undergo an upward breakout during these periods.
ETH hit an all-time high of $2,650 on April 22 before retracing its steps slightly, now trading at $2,569. The number of whale accounts with 10,000 to 100,000 ETH on the network spiked between April 17 and 22, with 24 new such accounts added to the network.
However, April 22 also saw the release of a report that indicates the Biden administration plans to increase capital gains tax to 39.6%, leading to panic selling in the markets. Bitcoin prices pulled the wider market down as the leading cryptocurrency by market cap fell below $48,000 before recovering slightly to around $53,000 at the time of writing.
Competition from other chains remains fierce, and Ethereum transactions were flipped and exceeded by those on Binance Smart Chain’s Pancake Swap protocol earlier in the week. Even as Ethereum logged a record 1.56 million transactions last Wednesday, Pancake Swap processed more than five times that number of transactions.
The long-term viability of BSC, with its dramatically reduced chain-security and state bloat, gives pause for concern. However the chain’s cheap transaction fees speak to an enormous pent-up demand for DeFi that may come back to Ethereum once “Layer 2” (Optimism and Arbitrum) get into full swing.
The H. C. Wainwright Cryptocurrency, Blockchain & FinTech Conference will take place on Tuesday April 27, featuring guest speakers Michael Saylor of Microstrategy and Apple co-founder Steve Wozniak.
H.C. Wainwright is a New York investment bank, and the event will include discussions on crypto mining, regulations, trading, and other topics.
Boston Blockchain Week 2021 will be held on May 3, with keynote speakers including Circle’s Jeremy Allaire, Algorand CEO Steve Kokinos, and Rarible CEO Alexei Falin among many others. The event will take a strong focus on NFTs this year, also delving into DeFi and institutional adoption.