Crypto Markets Have Reached Record High Levels – DeFi and Ethereum Driving the Momentum
This weekend’s grand crypto momentum was only a scrap of the really erratic action we saw in late 2017. Ethereum was dominating, but rather than the ICO-saturated market of last years, DeFi platforms have taken the front seat in the sector this year.
Cryptocurrency markets have attained their highest levels in 2020 when it comes to total market capitalization – beating February’s peaks of $300 billion, the total market cap went to $360 billion this Sunday.
The figure has yet to overtake the 2019 peak in mid-June when the total capitalization surpassed $380 billion by a bit, but we’re not way behind. A mass liquidation of leveraged positions in dominant exchanges seems to have ended the momentum on Sunday when markets canned $25 billion in less than an hour:
Alex Saunders, CEO of Nuggets News, was among those who indicated the risks of leveraged trading with this plain visual snapshot of the five-minute ETH chart:
At the time of press, crypto markets have reached more than $342 billion.
DeFi Leading Momentum
Besides trading experts and fans, digital asset markets have been hopeful this year in spite of everything else that is destroying the global economy. Kelvin Koh of the Spartan Group cryptic hedge fund has been looking into market movements and linking them with the massive moves that some DeFi tokens have been marking recently.
“The market has changed in the last 48 hrs, and we are now entering into the second half of this 3-year bull market which started in Jan 2019. There is new capital flowing into crypto probably enticed by the massive rally in DeFi tokens over the last few months,” he said.
DeFi markets have also hit a new record high of $4.23 billion total value locked, and this has been moreover increased by the resurgence in ETH prices over the last few days.
According to Koh, the new capital entering markets is now heading into larger-cap coins, which include Bitcoin, Ethereum, and XRP. Since the three-month consolidation time was crushed more than a week ago, over $80 billion were input into the markets.
7/ For those that missed the first DeFi run, this will be an opportunity to position for the second wave. Don’t miss it this time.
— SpartanBlack (@SpartanBlack_1) August 2, 2020
Ripple’s XRP has rarely seen such a boost, but it also went over 40 percent in under a week, which further confirms this narrative. Koh added that smaller-cap coins will probably be negatively impacted in the short-term because of illiquidity.
“This trend will likely persist until $BTC, and $ETH have run their course and significantly reversed the underperformance YTD,” Koh predicted.
Ethereum in the Driver’s Seat
Ethereum, which recently had five years since on the market, is currently leading the market, as optimism for ETH 2.0 has freshened up with the most recent ‘Medalla’ public testnet set to roll out on July 4th. ‘Phase 0’ heading to mainnet before this year ends is probably the result in ETH prices hitting their highest levels in more than two years.
For now, the retest of $400 for ETH has been a gigantic move. It is the first time that the price has peaked like this since August 2018; however, on-chain metrics are showing that Ethereum is still undervalued, even if it has reached these levels.
The move is a long-awaited and higher-reaching for the asset, which supports the idea that the downtrend has indeed reversed finally. An optimistic cross on the monthly MACD also highlights the longer-term trend pattern.
Koh also said that the most valuable DeFi tokens are expected to take five while this movement is happening. The investor expects a second wave of DeFi momentum after the current one has run out of breath.
“When this large-cap rally has run its course likely within 2-3 months, I expect a flood of capital to flow back into the DeFi names again, triggering the next phase of re-rating, which is likely to be even more powerful than the first wave.”
Koh added that we are now probably entering a bubble that will last for the following 12 months or even longer, which also matches other pricing models such as stock to flow.
Eduard Watson Author
An experienced finance writer for more than 10 years, active industry watcher, and gadget enthusiast.