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 overall project. With the DeFi boom in full swing, Ethereum network activity has seen a significant uptick – but what does it mean for future price?
Ethereum Network Activity Sees Major Spike in Active Addresses
The 7-day moving average of active ETH addresses hit above 400,000 last week, the highest level since May 2018.
This is a major increase from the low seen in January of 180,000. The number of addresses is not equivalent to the number of actual users, as people and organizations often have multiple addresses. However, the spike is one way of measuring utility of the network.
Another indicator is the open interest in Ethereum futures, meaning the value of all Ethereum futures contracts which are open and yet to be settled. Open interest is approaching an all-time high, and this often signals volatility and price breakouts on the horizon, although these breakouts could be in either direction.
Corporate interest in Ethereum is also on the rise, with Visa seeking an Ethereum developer for their upcoming blockchain app. As a major international payments provider capable of handling 1,700 transactions per second, Visa is a giant in the world of finance. The multi-billion dollar corporation’s interest in Ethereum could signal mainstream adoption on the way.
Visa applied for a blockchain patent in March in 2018 and published the application in May 2020, citing Ethereum as a potential network to use for a branded digital currency.
More Progress Towards ETH 2.0
Ethereum protocol developer and Prysmatic Labs co-founder Raul Jordan published an Ethereum Dev update in early July signalling a new public multi-client testnet is weeks away.
The public multi-client testnet is the last major step in the roadmap before rolling out Phase 0 of Ethereum 2.0 and the long-awaited staking contract.
Optimism about Phase 0 was dashed days later in a Reddit AMA on July 9th when ETH 2.0 researcher Justin Drake expressed doubts that the network update was on track for 2020, saying the earliest practical date may be 2021.
However, Ethereum co-founded Vitalik Buterin voiced his support for “launching phase 0 significantly before that date regardless of level of readiness.” He clarified his view by saying that the launch came with lower risks than the original network launch.
Drake also went against his own doubts just moments later, posting to Twitter to say that he had heard the community “loud and clear” and that “the goal is set; let’s ship” when referencing the 2020 launch.
This was followed by an even more bullish Tweet from Prysmatic Labs developer, Preston Van Loon, who bet 32 ETH (using an Ethereum prediction market no less) that Phase 0 would launch before 2021.
DeFi Growth Continues
The DeFi boom has been central to the recent rise in Ethereum activity. 10 DeFi tokens outperformed Bitcoin in recent months, with growth between 41% and 804% compared to just 27% for Bitcoin. The growth was led by LEND token with 804% gains. LEND is the native token for the Aave platform, an open-source, non-custodial lending platform in the DeFi ecosystem that made a name for itself with the launch of “flash loans” (and more recently, Decentralized Credit Delegation). Aave is currently ranked #5 in DeFi by TVL, with locked assets of $154 million.
DeFi protocols have been paying out approximately $25 million per month, with yield farmers now flocking to the ecosystem to harvest those gains. The total value locked in DeFi now stands at $2.16 billion, with half of that growth happening in June alone.
There are currently 3.19 million ETH tokens leveraged in DeFi, down slightly from an all time high set over the weekend of 3.2 million. Locked or leveraged ETH in DeFi is potentially a leading indicator of ETH price appreciation, although that correlation has departed somewhat since the flash crash of March 17th 2020, now known as Black Thursday.
Meanwhile, fees for the Uniswap decentralized exchange on Ethereum have been approaching those of Bitcoin. Some in the community have speculated that Uniswap fees may soon outpace those of Bitcoin.
Meanwhile, the Binance listing of the SNX DeFi token didn’t have the bullish impact on price action that many expected. SNX has been trending upward in a parabolic price surge over the last month with analysts pointing to a sell-side liquidity crisis emerging in the SNX market.
SNX was particularly interesting due to its lack of correlation with the wider market, a trend that some analysts believe demonstrates the project’s independent value. Many more DeFi tokens are being listed on mainstream exchanges over the coming months, and it may be worth monitoring their correlation, or lack thereof, to Bitcoin and other assets.
The fourth CoinGecko Meetup is on July 15, largely focused on the theme of cybersecurity and whether cryptocurrency exchange security practices are enough to prevent future attacks. The event is online and features CoinGecko co-founders Bobby Ong and TM Lee as well as Hacken Group CEO Dyma Budorin.
On July 16th, ConsenSys is hosting a live webinar on Syndicated Loans and Blockchain Technology. The US syndicated loans market currently totals $2.5 trillion, and the ConsenSys webinar will discuss the nature of syndicated loans and how ConsenSys is using Ethereum technology to streamline the issuance of loans through asset tokenization.
The event features Codefi CTO Didier Le Floche, the ConsenSys Global Head of Strategic Sales and Business Development Guillaume Dechaux, and Bridget Marsh, Executive VP & Deputy General Counsel of the Loan Syndications and Trading Association (LSTA).