26 January 2021

DeFi Crypto

The overall cryptocurrency market seems to be consolidating at the moment at around a $950 billion market cap while the DeFi Crypto market leads. The world’s largest cryptocurrency Bitcoin (BTC) remains under pressure and continues to trade in between $32,000-$33,000 levels.

The altcoin space has been relatively showing strength led by Ethereum (ETH) which has touched a new all-time high above $1450. Chainlink’s LINK coin is another top-performer in the altcoin space as the Chainlink (LINK) price tops $25 for the very first time to topple Litecoin (LTC) by market cap.

Along with Ethereum, the DeFi crypto market is making solid moves wherein the total value locked in crypto DeFi space surpasses $26 billion. Let’s take a look at some of the fresh developments in each sector.

Bitcoin (BTC) Consolidates Under $33,000; SOPR Resets While Institutional Inflows Tickle

The world’s largest cryptocurrency Bitcoin (BTC) continues to consolidate at this moment while staying under $33,000 currently. At press time, BTC is trading at $32,505 with a market cap of $601 billion.

Although the Grayscale Bitcoin Trust (GBTC) continues to buy BTC over the last ten days, the speed of institutional inflows coming into the world’s largest Bitcoin fund has slowed down notes JPMorgan analysts.

Due to this, the analysts think that the Bitcoin (BTC) price bounce back to $40,000 levels seems difficult at this stage. The Grayscale Bitcoin Trust (GBTC) currently holds $20.4 billion in net assets under management. On a four-week rolling average, while Bitcoin has corrected 17%, the GBTC has dropped faster at 22%.

DeFi Crypto
Courtesy of Bloomberg

The JPMorgan strategists wrote: “At the moment, the institutional flow impulse behind the Grayscale Bitcoin Trust is not strong enough for Bitcoin to break out above $40,000″. They added: the “risk is that momentum traders will continue to unwind Bitcoin futures positions. The near-term balance of risks is still skewed to the downside”.

On the other hand, over the last year since March 2020, the U.S.-based institutional players have been strongly accumulating Bitcoin whereas the Asian whales have been selling. In a recent development, on Monday, January 25, Nasdaq-listed Bitcoin mining giant Marathon Group announced the purchase of 4,812.66 BTC, in an aggregated purchase price of $150 million. The purchase happened via NYDIG’s Bitcoin trading facilities.

In other news, top university endowments for Harvard, Yale, and Brown have been reportedly buying Bitcoin (BTC) over the last year. Two sources familiar with the matter told CoinDesk that apart from these three several other colleges are investing in crypto. “There are quite a few. A lot of endowments are allocating a little bit to crypto at the moment,” they said.

Bitcoin on-chain fundamentals improve as SOPR resets to 1 as per on-chain data provider Glassnode. The Bitcoin SOPR (Spent Output Profit Ratio) indicator is a proxy to determine the overall BTC profit and loss. Analyst Willy Woo explains: Coins moving between investors per hour (24h MA) no longer carry profit on average. To push SOPR lower, investors would have to be willing to sell at a loss.”

Ethereum Hit New All-Time High Above $1450; DeFi Crypto Takes Lead

The world’s second-largest cryptocurrency Ethereum (ETH) kickstarted the week on a high note. On Monday, January 25, the ETH price surged all the way to hitting a new all-time high above $1450 levels.

With the recent rally, ETH has registered more than 95% year-to-date gains so far alone in 2021. Interestingly, it comes at a point when we are just two weeks away from the launch of the CME Ether Futures contracts. The Ethereum (ETH) rally comes along with improved on-chain fundamentals.

The outflow of ETH coins at exchanges has hit an all-time high. Over the last week, the amount of ETH held at the exchanges has also dropped by 3.5% and hit a 15-month low.

DeFi Crypto
Courtesy of Glassnode

The liquidity shortage of ETH suggests strong accumulation and most of the ETH is reportedly going to cold storage or to the ETH 2.0 deposit contracts for staking. The ETH coins staked in deposit contracts have also reached an all-time-high at the moment. Besides, the number of ETH addresses in profit has attained a new high.

DeFi Crypto
Courtesy of Glassnode

Apart from several on-chain factors, the ETH price is driven by massive optimism around the decentralized finance – DeFi – crypto market.

Another altcoin with a solid rally recently is oracle service provider Chainlink’s LINK cryptocurrency. Over the weekend, the Chainlink Coin shot up above $25 and moving over $10 billion market cap toppling giants like Litecoin (LTC).

Chainlink’s price rally comes on the backdrop of solid network growth and strong on-chain fundamentals. On-chain data provider Santiment notes that the Chainlink crypto network has “5,301 new addresses created which is 143% higher than its 2,189 three months ago”.

DeFi Crypto
Courtesy of Santiment

Today, 80-90% of blockchain network applications require oracles to create value and Chainlink remains the top service provider for them.

The DeFi Crypto Space Registers Strong Rally

On Monday, January 25, the crypto DeFi space registered a strong rally with all of the top-ten DeFi coins surging 3-8%. The total value locked (TVL) in DeFi jumped above $26 billion for the first time ever as per data on DeFi Pulse. Maker DeFi crypto coin leads the DeFi crypto-list with over 18% market dominance. Aave and Uniswap remain among the list of best DeFi crypto coins grabbing investors’ attention. SushiSwap has also registered good gains over the last week

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