Last week saw growth in DeFi, which hit an all-time high in TVL along with multiple bullish indicators and strong fundamentals for the Ethereum network. Let’s take a look at the market factors underpinning ETH’s price action as well as what to expect in the coming week.
Developments in DeFi
Circle High-Yield Savings Account
The DeFi space saw several interesting developments last week. Circle announced the launch of high-yield savings accounts built entirely on USDC, with open term APR of 8.5% and fixed term accounts offering between 9.5% to 10.75% APR with options ranging from 1 month to 12 months.
Circle is a financial services group focused on making blockchain technology and cryptocurrencies more mainstream and easier to use. The announcement that users will soon be able to receive high rates of interest on their decentralized digital assets may help drive adoption of DeFi and lend credibility to a space striving to provide an alternative to traditional financial services.
“DeFi Dollar” Garners Attention
The DeFi dollar project caught the interest of Twitter influencer DeFi Dad, who cited “yet another major DeFi project born in India.”
DUSD is a stablecoin-backed asset that hedges against the risk of a black swan event or other financial crash tanking the price of one particular stablecoin. In essence, DUSD acts as a basket of stablecoins, preventing users of crypto-collateralized stablecoins like Maker from being wiped out during sudden downturns.
GRT – The Next LINK?
Finally, web3 infrastructure protocol, The Graph, went live last week with a rally that saw its token, GRT, rise from a few cents to over $0.70 in a matter of days. The Graph has launched a decentralized network for the secure storage and distribution of public and private data.
On December 20, the total value locked in DeFi hit an all-time high of 16.7 billion. Maker dominance is at 16% with $2.82 billion min TVL, followed closely by WBTC with $2.75 billion in TVL.
Institutional and Corporate Adoption
CME Group, the world’s largest financial derivatives exchange, announced the launch of Ethereum Futures on December 17. CME Group’s launch of Bitcoin Futures in 2017 was one of the most significant instances of mainstream financial adoption in the crypto industry at that time, and the move to ETH futures is a big step forward.
Launching on February 08, the new CME product will be cash settled with one contract worth 50 ETH. CME Group has previously stated that when it comes to crypto, its focus lies solely in Bitcoin, but recent strength in ETH fundamentals may have resulted in the change of heart.
CME Group’s Tim McCourt stated that the move was based in increased demand, saying “we believe the addition of Ether futures will provide our clients with a valuable tool to trade and hedge this growing cryptocurrency.” The group currently has an annual revenue of $4.87 billion.
Coinbase is taking steps towards becoming a publicly traded company, filing a confidential S-1 ahead of a potential IPO last week.
All that remains is for the SEC to review the application. Coinbase may begin trading publicly as early as 2021.
ETH Price Rises With $1B+ Staked on Eth2
Last week ETH reached a high of $676.96, the highest price point since May 2018.
ETH has gained over 350% this year, falling as low as $88.02 in March during the onset of the COVID 19 pandemic. ETH has actually outperformed Bitcoin in terms of percentage gains this year and unlike Bitcoin, Ethereum still hasn’t come close to its all-time high of $1385.02 yet.
It’s likely that the market frenzy for Bitcoin has taken control of the crypto market as BTC price dominates mainstream and crypto news outlets.
It remains to be seen if and when ETH will complete its rally to the previous all-time high seen in 2018. The most recent level of major support lies at $443, followed by further support at $360, and ETH needs to maintain strong upward momentum to avoid those levels.
On the other hand, with strong on-chain fundamentals and a bull run in the making, ETH could be set for a rally to $800 if buying pressure holds out in the short-term. Eth2 currently has over $1 billion staked according to data from Etherscan, having gone live less than a month before. The amount of ether held on centralized exchanges continues to fall, potentially a sign that traders intend to hold funds off-line in anticipation of price gains.
Mantra DAO founder JP Mullin will be answering questions at a community AMA session hosted by DeFi Discussion on December 21. The AMA will begin at 10am UTC, and one attendant will be selected to receive a $100 prize for participating.
On December 22, Matic Network will host its monthly community call starting at 5:30 am UTC. Matic Network is a Layer 2 scaling solution for Ethereum that uses sidechains for off-chain computation while incorporating scaling solutions like Proof of Stake and the Plasma framework.