At the end of another week in crypto, TokenInsight breaks down what has been going on.
After being mopped up by the troop of WallStreetBetters, the cryptocurrency market gradually steps into a relatively stable period. The volatility caused by miners’ selling has been completely absorbed by the market. Bitcoin price climbed back above $36,000. The crypto’s price performance shows a gradual climb back to a high-level trend with a typical characteristic — the price increases with a lower trading volume.
High Price With Low Volume
This week, the trading volume of Bitcoin has rebounded compared to last week, but the biggest influence factor comes from the actions of WallStreetBet retail investors during the weekend. After Elon Musk tweeted "Bitcoin" on Jan. 29, Bitcoin spot trading volume reached a daily high of $20.63 billion on Jan. 30, and then fell back to normal levels the next day.
From the monthly chart, the impact of retail investors is limited indeed, for the impact from miners’ sell-off in mid-January was much greater than that from retail investors. The miners’ sell-off caused a price shock period of nearly a month, while a large number of retail investors only caused a jump in price and trading volume on the same day.
Although the trading volume is flat, the Bitcoin price has changed significantly. The upward trend of volatility starting from last week has continued, but the increase is faster. As of 11:00 pm on Feb. 4th, the price of Bitcoin has risen to higher than $37,000. The shock caused by the miner sell-off in January seems to have been basically absorbed by the market, and the lower trading volume indicates that the market's expectations for Bitcoin are generally more positive, and there are many people who hold the cryptos on the sidelines. This shows that the price of Bitcoin will rise further in the near future.
The continued increase in the prices of major exchange platform tokens and decentralized lending platform tokens also provides evidence for possible future price increases. From last year's data, Bitcoin is closely related to large-scale exchanges’ platform tokens and decentralized lending platform tokens. The rise of the latter two often indicates the recent rise in the prices of mainstream cryptos.
Gas Fee Surges ATH with ETH Prices, DeFi Seems to Be Soaring Back
After becoming the best performing crypto in 2020, Ethereum does not seem to stop moving forward. The recent volatility of Ethereum also showed similar characteristics of "high price and low volume" in the last week.
Ethereum's weekly spot trading volume is $41.51B, a slight decrease of 0.62% from last week, basically the same, while the volume of perpetual contracts is only $151B, a slight increase compared to last week, but the spot price rises all the way and breaks through $ 1,600 per ETH, which is a new all-time-high.
The booming price has pushed gas fees to a new high, and the average cost reached more than $20 this Thursday. The flourishing DeFi market is the root cause of the increase in gas fees and Ethereum prices.
Under the leadership of mainstream DeFi projects such as Uniswap and Aave, the total DeFi value locked has increased by 16.37% in 24 hours. Moreover, starting from 2021, the pressure of transaction settlement on the Ethernet network has reached a new high, pushing the gas fee to an average historical peak of $23.27 per transaction, but user demand has not declined. It can be seen that DeFi in 2021 is soaring.
In response to rising gas fees, many investors have chosen to buy delivery futures for hedging. On the other hand, despite the recent relatively sluggish options market, the number of contracts traded on Ethereum options has always been much higher than the number of Bitcoin contracts in Deribit, and most of contracts are short-term option contracts mainly, which indicates that a large number of traders are using option tools to hedge possible trading risks.
Highlights Picked by TokenInsight
Grayscale Reopens Its Ethereum Trust to Investors
On Feb. 1, digital asset manager Grayscale Investments said Monday its Ethereum Trust (OTCQX: ETHE) is again open to accredited investors.
OKEx Collaborates with Mask Network and Mirror Protocol Launches Second ITO: $mTSLA
On Feb. 3, in light of recent events involving WallStreetBets, Robinhood and Elon Musk, which grabbed everyone’s attention throughout the world, Mask Network, together with Mirror Protocol, OKEx, Transak offered the mirrored asset $mTSLA on Twitter.
CrossTower Launches Bitcoin Fund to Compete With Grayscale’s GBTC
On Feb. 4, crypto capital markets firm CrossTower, based in Bermuda, launched a hedge fund at the end of the month in a bid to compete with Grayscale’s Bitcoin Trust (GBTC) and other bitcoin funds for accredited investors.
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