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Ethereum Price Preview: January 25 – January 31

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Our latest report covered the emerging data pointing to a bull run. Last week, ETH broke a new all-time high, entering a new era of price discovery and adoption. Let’s take a look at the factors influencing the upcoming price action.

ETH All-Time High as Crypto Bull Run Continues

On January 19, ETH broke a new all-time high of $1,439.10, beating the previous high of $1,419. ETH rose a further 17% on January 24, hitting a new record price of $1,478.70 before pulling back slightly.

ETH vastly outperformed most assets last year including Bitcoin whose 321% growth paled to Ethereum’s 487%. This trend has so far continued into 2021.

The new price point is a validation of the achievements and milestones hit by the Ethereum project over the last year, with greater public awareness around the project and development for Eth2 showing more promise as funds continue to be deposited (now at nearly 2.5% of all circulating ETH).

Of course, Bitcoin’s bull run also continues. Glassnode data shows that Bitcoin exchange liquidity has been seriously depleted as demand increases, a firm indicator of an extended bull run.

Trillion-dollar asset management giant Blackrock is reportedly seeking to allocate some of its funds to Bitcoin in what may be the most promising incident of institutional investment to date. Blackrock made two filings on January 20, both of which stated “certain Funds may engage in futures contracts based on bitcoin.”

The filings added that “the only bitcoin futures in which the Funds may invest are cash-settled bitcoin futures traded on commodity exchanges registered with the CFTC.” A Blackrock investment in Bitcoin is not yet confirmed, but the groundwork has certainly been laid.

Anti EIP 1559 Movement Gains Momentum

Last week, EIP 1559 began stirring up some negative sentiment among miners. The update, which would burn a portion of Ethereum transaction fees (instead of awarding them to the miner), has been met with the beginnings of a strong pushback by miners. A new mining pool, Flexpool, has been poaching miners from bigger pools in an effort to block the proposed network update. 

“Don’t be a slave to your mining pool. Blacklist pools that support robbing their miners just so that they can inflate the price of [ETH] for rich speculators,” said Flexpool. Flexpool called on miners to abandon their pools on January 15, and over 400 miners have joined so far. However, other mining pools have joined Flexpool to form a type of cartel, accounting for 30% of the hashrate so far. While miners could not block the update from happening, they could create another contentious hardfork in a similar style to Ethereum Classic. However, it is not clear that there would be significant support for such a fork by other non-mining stakeholders (developers, users and investors).

The largest three Ethereum mining pools are either against the update, such as Bitfly, or neutral to it, such as F2pool and Binance Pool, leaving the update with a shaky foundation moving forward.

NFT Market Heats Up With $700k+ Sale

NFTs, or non-fungible tokens, have been the center of much discussion throughout the crypto industry’s growth cycle. The CryptoKitties game is probably the most famous example, with users “breeding” unique representations of cartoon cats on the Ethereum network and selling them for ETH.

Last week, an NFT sold for $726,000 worth of ETH, a firm reminder that the market is in full swing again. The FlamingoDAO for NFT investments bought a rare “alien” NFT at auction for 706 ETH. The NFT is part of the CryptoPunk universe, and last sold in 2017 for $2,100 worth of ETH.

FlamingoDAO stated that “It’s understandable for folks to be skeptical about NFTs, but in our view, NFTs are the future of not just digital art, but all digital property. It’s the tip of a very large spear.”

Commenting on the value of the CryptoPunk collectible, FlamingoDAO representative Priyanka Desai acknowledged that many people find it hard to understand the value behind NFTs. Desai said Flamingo may “build galleries in different metaverses for putting this and other pieces on display,” adding that “I showed my mom and she was like… “what?””

The DeFi market is now worth over $26 billion, with Maker being the leading protocol at $4.8 billion in total value locked.

Source: DeFi Pulse

Media Roundup

The European Blockchain Convention takes place today in Barcelona, featuring two days of content from industry leaders, entrepreneurs, corporations, regulators, investors and developers, and a premier opportunity to network with potential business partners from all around the continent.

The North American Bitcoin Conference, is a virtual online event taking place on January 28 – 29 featuring hundreds of big names in crypto. These include Bitcoin Cash advocate Roger Ver, Cardano founder Charles Hoskinson, and Monero developer Riccardo Spagni to name but a few.

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Conor Maloney
Conor Maloney Analyst