DeFi TVL quietly climbs to record highs while the NFT boom subsides

Hype cycles can work wonders for token prices and social media statistics, but they also bring increased pressure on developers to launch a functioning product that validates its rising market cap. 

As nonfungible tokens took center stage over the past six weeks the decentralized finance (DeFi) sector took a break from the spotlight as developers refined their protocols and sought out interoperable, Ethereum network alternatives.

Data from CoinGecko shows that the total value locked (TVL) on all DeFi platforms has steadily grown since the market pullback at the end of February, with the TVL for the entire DeFi sector now standing at a record-high of $74 billion.

A closer look at the list of protocols shows that some of the biggest gains over the past seven days were on protocols operating on the Binance Smart Chain (BSC). BSC has emerged as one of the go-to competitors for the Ethereum (ETH) network thanks to low fees, cross-chain capabilities, and connections to the entire Binance ecosystem.

PancakeSwap (CAKE) and Venus (XVS) have both seen their TVLs increase by more than 30% over the past week while THORChain (RUNE) and Alpha Finance (ALPHA) have increased 61% and 47%, respectively.

Top 10 total value locked  DeFi ranking. Source: Defi Llama

Notable gains from Ethereum based projects include a 26% gain in TVL for AAVE and Balancer (BAL), while the newly launched Vesper (VSP) protocol has rapidly amassed $1.64 billion over the past six weeks, reflecting a 35% increase in the the past seven days.

DeFi tokens rally higher

Alongside the rising TVL has been a rise in the token price of many of the top protocols as savvy traders accumulated during the February lows while crypto and mainstream news blasted daily coverage of the latest record-breaking NFT sales.

Data from CoinGecko shows that the total market capitalization of all DeFi tokens has also surpassed the previous highs established in February and now totals a record $98.4 billion as institutional money continues to pour into Bitcoin (BTC) and the wider cryptocurrency sector.

Total market cap of the top 100 DeFi tokens. Source: CoinGecko

THORChain again tops the list for the biggest gains over the past seven days with its price increasing 88% to a new record high of $8.89, while JUST (JST) and Akropolis (AKRO) have both increased 57% and currently trade at $0.129 and $0.076 respectively.

Bitcoin (BTC) is now eyeing the $60,000 level again and Ether trades near $2,000, prompting calls from many across the industry for an approaching price surge, as seen in the following Tweet from Real Vision Group CEO Raoul Pal: 

The market cap of the entire digital asset space feels like the break of $1.8trn is kind of a big deal. The chart pattern suggests acceleration lies ahead on that break. My guess is the whole space doubles in next 2 to 3 months. Let see! pic.twitter.com/125lTVAkNH

— Raoul Pal (@RaoulGMI) March 30, 2021

Now that the NFT craze is subsiding, traders will look for the next sector to undergo a hype cycle and DeFi looks primed to see another leg in up as token prices, transactions and the TVL is on the rise again.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Ethereum season? ETH options traders are placing big bets for June

The price of Ether (ETH) is continuing to rally, reaching $2,000 on Friday on the back of strong technical momentum following a high-profile announcement from Visa.

As Cointelegraph previously reported on Sunday, Visa will allow its partners to use USD Coin (USDC) on the Ethereum blockchain network to settle transactions.

ETH futures total open interest. Source: Bybt.com

Since then, the interest in Ethereum across both futures and options markets is seeing an uptick, with the former approaching $7 billion, the highest in over a month. 

The options market for Ethereum is particularly optimistic

According to Cantering Clark, a cryptocurrency trader and analyst, the Ethereum options market shows big bets heading into June.

Ethereum options expiration. Source: Cantering Clark

The strike price with the highest open interest is $3,200. Although this does not necessarily mean that there is a high probability of ETH hitting $3,200, it indicates that there is significant interest at that price level. The trader said:

“Is it the start of $ETH season? Options market making some big bets into June. 3200 strike has a bullseye on it.”

While there could be multiple reasons why traders might be anticipating ETH to have surpassed $3,000 by June, one of the biggest factors is the much-anticipated EIP-1559 upgrade.

EIP-1559 is set to go live in July 2021, which would overhaul the existing fee structure of the Ethereum blockchain.

Simply put, the proposal burns fees that are paid in ETH rather than paying miners, which proponents say should stabilize fees for transacting on the Ethereum blockchain. As Cointelegraph reported, the cost of using the blockchain rose 77% over the past few days in line with a 31% increase in the price of Ether.

EIP-1559 essentially burns some of the ETH paid for transacting, which should reduce the circulating supply of ETH and hence put upward pressure on its value.

Since a lot of options targeting the June strike price would expire right before the EIP-1559 implementation, it means traders are expecting a rally going into the implementation phase.

Massive ETH outflows are also being spotted

Meanwhile, Ki Young Ju, CEO of CryptoQuant, points out that Ethereum has been seeing massive exchange outflows in the past few days.

Coinbase netflow. Source: CryptoQuant

Earlier this week, Ki noted that 400,000 ETH left Coinbase, which could signal a spike in institutional interest in ETH. He said:

“400k $ETH flowed out from Coinbase a few days ago. Speculative guess, institutions are now buying $ETH.”

Outflows often signal strong accumulation by institutions and high-net-worth individuals because when whales buy cryptocurrencies on an exchange, they typically move their holdings to self-hosted wallets.

Hence, the view is generally optimistic for Ethereum over the next few months because positive on-chain data is supplementing a strong fundamental catalyst in EIP-1559.

Atop this, the number of active addresses are continuing to increase with exchange reserves consistently declining, indicating rising user activity and demand for ETH.

Glassnode also reported that the number of non-zero addresses hit a new high, suggesting that user activity is on the rise.

Ethereum number of non-zero addresses. Source: Glassnode

Researchers at Glassnode said:

“Ethereum $ETH Number of Non-Zero Addresses just reached an ATH of 56,543,380.”

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Bitcoin beats out final resistance as Ethereum returns to $2K

Bitcoin (BTC) briefly hit $60,000 on April 2 in the latest installment of its slow grind back to all-time highs.

BTC/USD 1-hour candle chart (Bitstamp). Source: Tradingview

BTC price taps $60,000

Cointelegraph Markets Pro and TradingView showed bullish tendencies remaining overnight for BTC/USD, with local highs of $60,110 on Bitstamp.

A correction brought the pair down nearer to $59,000, circling $59,500 at the time of writing. 

The sustained higher levels mean that Bitcoin has effectively canceled out the flash crash from earlier this week, while still continuing to trade in a defined corridor.

For popular trader Crypto Ed, the outlook was for $60,000 to disappear as resistance based on fading selling pressure on exchanges. Higher than $70,000, however, may have to wait longer.

“I mentioned BTC target $73k and ETH $2300,” he wrote on Friday.

“From what I see now, ETH is on track. BTC not convinced yet it will reach that target in this cycle but I do think we’ll see a strong push above 60k (soonish).”

Others are more optimistic, with short-term estimates including $68,000 and $73,000 and 2021 targets exceeding $288,000.

BTC/USDT buy and sell levels (Binance) as of April 2. Source: Material Indicators

“The ~$57,500 area rejected BTC in February. But it looks like BTC turned this exact same level into support a couple of days ago,” fellow Twitter trader Rekt Capital added.

“Now it’s about follow-through from here. And we’re seeing some follow-through today.”

Ether at $5,000 “inevitable”

Crypto Ed touching on Ether (ETH) comes as the largest altcoin by market cap touched $2,000 for the first time since Feb. 20.

After dipping in line with Bitcoin price action, ETH/USD returned to form over the past week, seeing almost constant higher highs on daily timeframes to near its historic record of roughly $2,040.

ETH/USD 1-hour candle chart (Bitstamp). Source: TradingView

As Cointelegraph reported, price targets for Ether are now more bullish than ever, and include $2,600 next, with $5,000 and even $10,000 in play.

The amount of ETH held by exchanges, like BTC, has been dropping sharply this year.

ETH exchange reserves vs. ETH/USD. Source: CryptoQuant

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Filecoin market cap hits $450B after FIL price rallies above $230

The fully diluted valuation of Filecoin (FIL), a digital payment and cryptocurrency system built on top of the InterPlanetary File System (IPFS), has reached $450 billion.

Filecoin is a blockchain that enables users to rent unused hard drive space to store and retrieve data. Its model is similar to Snowflake, which completed the biggest software IPO in history in September 2020.

If you’re excited about Snowflake, just wait until you learn about Filecoin

— Barry Silbert (@BarrySilbert) September 16, 2020

A combination of three factors likely led the price of FIL to surge in recent weeks: technical momentum, rising demand from China, and its uniqueness compared to Ethereum.

Analysts say big demand is coming from China

According to Wu Blockchain, a crypto-journalist based in China, the demand for FIL has been heating up in China.

The daily volume of FIL on Huobi, which ranks as China’s largest cryptocurrency exchange, reached $24.2 billion. The journalist said:

“China is crazy for Filecoin, with a 24h increase of more than 30%, reaching a maximum of $236. The 24h trading volume of FIL in Huobi, China’s largest exchange, reached $24.2b, nearly three times the volume of the second ETH $8.8b, Bitcoin was $7.8b. FILDOWN, a short-selling leveraged token in Binance FIL, plummeted by 53%, with a turnover of US$3.4 billion, indicating a large number of short FIL liquidation in Binance.”

A plausible scenario could have been that a fear of missing out (FOMO)-like trend across Asian markets, including China, created a strong uptrend led by the derivatives market.

As the demand started to spike in China, the open interest of Chinese futures exchanges rose, eventually flowing into global futures trading platforms.

Technical momentum is strengthening

When the price of FIL began to increase, the open interest across major futures exchanges began to increase rapidly.

According to the data from Bybt, within 24 hours, the open interest of Filecoin increased by 46.37%.

#Filecoin open interest have increased by 46.37% in 24 hours .
https://t.co/4pvKwyHGuk pic.twitter.com/NSykPB8iOl

— Bybt (@bybt_com) April 1, 2021

A pseudonymous trader known as Waro explained that when a cryptocurrency sees a strong uptrend like this, it is difficult to catch a top.

Many traders attempt to predict the top, which leads to short position liquidations and this causes a short squeeze that adds fuel to the rally. He said:

“I may not understand why $FIL keeps pumping but what I do know is trying to catch a top is suicide more often than not. For those that don’t understand that tweet: The likelihood of you getting murdered trying to catch a top short is higher than you shorting the top.”

FIL eventually saw an abrupt short-term top, falling 23% within merely 45 minutes across major exchanges.

FIL/USDT 4-hour price chart (Binance). Source: TradingView.com

Ethereum’s momentum could be a catalyst

James Spediacci, an Ethereum analyst, said that he continuously emphasized over the past four years that Filecoin brings uniqueness as a layer one blockchain that others struggle to as a competitor of Ethereum.

Spediacci explained that decentralizing cloud storage with IPFS is an innovative technology that actually adds value to the blockchain space. He said:

“I’ve been saying this since 2017: ‘Filecoin is the only other blockchain besides Ethereum that actually adds value to the world by decentralizing cloud storage with IPFS and it is complimentary to Ethereum.’ If you dumped your $FIL at $20, you’re not going to make it.”

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Video game loot boxes linked to problem gambling, study shows | Gambling

Loot boxes, video game features used by nearly 40% of children, have clear links to problem gambling, according to a study that has reignited calls for them to be regulated as betting products.

Researchers analysed 13 studies into the behaviour of gamers who spend on loot boxes, which allow players to spend money on randomised in-game rewards that can aid players’ progress or enhance the appearance of characters, without knowing what they will get.

All but one of the studies showed a clear correlation between the use of loot boxes and problem gambling behaviour, under the commonly-used Problem Gambling Severity Index (PGSI) measure.

They were “structurally and psychologically akin” to gambling, the report found, yet are used by nearly half of children who play video games.

Approximately 5% of loot box users generate half of the £700m that video games companies make from them each year and about a third of that group are problem gamblers, the report says.

Despite growing concern about their characteristics and rising popularity, loot boxes remain unregulated in the UK, whereas countries such as Belgium have deemed them to be gambling products.

The Conservative MP Richard Holden said they were a “loophole” in the law.

“They are regulated in the same way as football stickers were when I was a kid and it is clear that these products have moved on so much fasters than the laws governing them,” he said. “Real regulatory action is needed as soon as possible.”

GambleAware, the leading gambling charity that commissioned the report, also backed tighter regulation.

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“[…] We are increasingly concerned that gambling is now part of everyday life for children and young people,” said the chief executive Zoë Osmond.

“GambleAware funded this research to highlight concerns around loot boxes and problem gambling, ahead of the upcoming Gambling Act review.

“It is now for politicians to review this research, as well as the evidence of other organisations, and decide what legislative and regulatory changes are needed to address these concerns.”

The government has said it will consider classifying loot boxes as gambling, as part of its ongoing review of the sector. A consultation period informing ministers and officials overseeing the review closed this week.

Researchers from the Universities of Plymouth and Wolverhampton, who wrote the report, called for clear labelling and age-rating for loot boxes, as well as disclosure of odds, tools to limit spending voluntarily and prices in real currency.

In practice, an age rating alone is likely to spell the end for most loot boxes, because it would mean many video games having an over-18 rating.

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