Ethereum Ecosystem Bolsters Bulls’ Power? What Brought Back Retail Investors
12 August 2021 - 12:00AM
NEWSBTC
Ethereum is back leading the crypto market rally as most of the
coins in the top 10 by the market move sideways in lower
timeframes. ETH’s price trades at $3,247 with a 3.1% and 28.8%
profit in the daily and weekly chart. The second cryptocurrency by
market cap has been trending to the upside on the back of a major
upgrade, EIP-1559 implemented with Hard Fork “London”. Investment
firm QCP Capital records an 85% price increase for ETH from its low
at $1,718 during July. The rally has been mainly spot-driven as the
upgrade received a lot of attention from mainstream media. Ethereum
has been promoted as “Ultra-Sound money”, due to the deflationary
nature of EIP-1559, by several players within and outside the
space. Thus, the crypto market has been experiencing a renewed
interest. This has brought back retail investors and speculators,
QCP Capital noted, and more buying pressure. In addition,
speculators are taking an interest in Non-Fungible Tokens (NFTs)
alongside their Ethereum, Bitcoin, and other cryptocurrencies
margin trading. The firm claims that NFTs’ trading volume has been
on the rise surpassing that of DeFi protocols and other Ethereum
based assets. In total, NFT related transactions have accounted for
21,291 ETH burn after EIP-1559 was introduced. The amount of burn
ETH due to OpenSea, an NFT marketplace, sits above Uniswap v2, one
of the most popular dApps and decentralized exchanges (DEX) on the
ecosystem. As seen below, OpenSea has even burned more ETH than
Tether, Uniswap v3, MetaMask, and others. The increase in ETH’s
burning rate, QCP Capital added, has led to more appreciation, more
interest from retail investors, and ultimately more speculation.
Thus, creating what they refer to as a bullish self-reinforcing
cycle. Ethereum Brought The Market Up, Can It Take It Down?
However, the firm remains cautious due to possible downside risks
in the short term. In a previous report, QCP Capital claimed the
following: (…) we expect a dampened trading environment from here
to Aug (short vol), followed by a rally possibly on the back of the
EIP-1559 mainnet implementation (long spot, long calls), & then
the larger Q4 Wave 5 selloff on the Fed’s taper (sell spot, buy
downside risk reversals). The U.S. Federal Reserve and its monetary
policy continue to play an important role across the markets. QCP
Capital warned about a potential move to the downside if the
Consumer Price Index (CPI) data suggest less risk of inflation.
Thus, increasing the possibility of tapering from the FED. The
recent crash in commodities and precious metals adds another
variable. Bitcoin and the crypto market have shown a strong
correlation with Gold, a 62% positive correlation in the past
according to the firm’s estimates. The precious metal recently loss
critical support and could experience a leg down. Bitcoin,
Ethereum, and other cryptocurrencies have recently been inversely
moving in accordance with Gold’s performance. However, many experts
believe that the two markets could return to a positive correlation
in the future. QCP Capital added: So we remain long delta but we
have been buying downside gamma for protection. In options, the
frenzied buying of calls in both BTC and ETH across the curve has
resulted in a short squeeze (in both spot and vols).
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