Cointree Crypto Market Update - August 4th 2021
Market report for traders
Everyone is buying
Bitcoin rose and ‘closed green’ for 10 days in a row. This has only happened four times in bitcoin’s history, and it has led to an average price increase of 61% over the following two months. As on-chain analyst Willy Woo said, “Everyone is buying... We've not seen a pattern like this looking back 10 years.”
After a slight sell-off, bitcoin is up 4% over the week. While some alt-coins also rose, Polkadot is up 26%, ChainLink is up 34%, Uniswap is up 17%, while Dogecoin is down 3.5% and Axie Infinity is down 4%.
Ethereum’s historic rise
For the first time ever, Ethereum’s price rose for 12 days in a row. The move comes in the runup to the London hard fork that will activate Ethereum Improvement Proposals (EIP), including the infamous EIP-1559. This EIP will burn a portion of the fees paid to miners, making Ethereum a deflationary asset as it’s total supply becomes less with time, many investors see this as an extremely bullish upgrade.
Is this the start of DeFi summer 2.0?
Is Ethereum’s price rise a case of buy the rumour, sell the news? Or are we starting to see DeFi summer 2.0? Looking beyond Ethereum, other DeFi projects have seen recent gains, with Terra up 70%, Perpetual Protocol up 59% and Kava up 22% this week.
At AU$162 billion, the total value locked (TVL) in defi is up AU$46 billion from its recent lows. It only has to increase another AU$46 billion to hit its all-time high of AU$208 billion. To put these numbers in perspective, the TVL in DeFi was less than AU$1 billion a little over a year ago.
Some of the DeFi protocols with the most TVL are:
- Aave with AU$11.7 billion
- Curve with AU$9.8 billion
- Compound with $8.85 billion
- Maker with $7.3 billion
- PancakeSwap with AU$4.7 billion
The growth in DeFi is likely coming from new users as the number of unique addresses interacting with DeFi recently hit a high of 2.091 million.
Bitcoin showing some strength with a solid bounce
Bitcoin (BTC) continued its move up over the first half of the past week, before bouncing back down off of the 200 day moving average. As RSI was solidly in the overbought region, it really would’ve needed some serious momentum to break higher.
The thing to take away from this is that the price has retraced at a rate lower than what it ascended at, signalling that there is no panic selling. What we are seeing here is more profit taking, along with the descent coinciding with the expiry of AU$2 billion worth of BTC options at the beginning of the month.
While bitcoin is back within the range it had been trading in for some time, I am going to be looking for it to start creating higher lows and higher highs from here as a confirmation of a true bullish move.
In the meantime, there is definitely ample opportunity to trade the support and resistance zones for some quick opportunities. As always, proper money and risk management is always paramount when trading, especially when looking at short-term trades in a volatile market.\
- Bitcoin (BTC) bounced of 200 day moving average
- Relative Strength Index (RSI) was in overbought territory and is moving back into a more neutral area
- Watching for higher lows and higher highs to confirm a bullish move
Disclaimer: Information provided is for educational purposes and does not constitute financial product advice. You should obtain independent advice from an Australian financial services licensee before making any financial decisions.