Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
Plus: Wallet Infrastructure Levels Up
Based on IntoTheBlock’s weekly newsletter. If you enjoy it, and would like to receive it every Friday make sure to sign up here!
Weekly Fees — Sum of total fees spent to use a particular blockchain in a week. This tracks the willingness to spend and demand to use Bitcoin or Ether.
- Bitcoin fees continued to grow, reaching the highest weekly amount in the year thus far
- Ethereum fees, on the other hand, continue to drop as on-chain activity has decreased
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges over the past seven days. Crypto going into exchanges may signal selling pressure, while withdrawals potentially point to accumulation.
- Nearly $400 million worth of Bitcoin left exchanges over the last seven days, compared to large inflows of $1.8B the prior week
- ETH recorded its highest weekly net inflows into centralized exchanges in 2022, following modest inflows last week
To Peg or Not To Peg?
The crypto market is still going through ripple effects arising from Terra’s collapse. Particularly, many other stablecoins have been going through their own difficult situations — even if they have managed to sustain their peg to the dollar.
Via IntoTheBlock’s Token Analytics
USDT Loses $10B — The market cap of the largest stablecoin, Tether, contracted by over $10 billion
- Users opted to redeem their USDT 1-to-1 for USD through Tether’s platform
- This has resulted in USDT’s market cap decreasing 12% from $84B to $74B
Terra’s collapse also caused reverberations throughout other parts of the ecosystem.
Via IntoTheBlock’s DeFi Insights
stETH Discount — The price of staked Ether reached its lowest in over a year
- Lido’s staked ETH token (stETH) dropped 0.95 ETH after remaining near parity with ETH throughout 2022
- stETH is not “pegged” per se, with an argument to be made for it to be at a discount, and also for it to be priced at a premium
Arguments For and Against an stETH Discount
- Since stETH is less liquid and also dependent on the success of the merge to be able to withdraw deposited ETH, these risk factors can lead it to be priced under 1 ETH
- On the other hand, since it generates yield (~ 3.7%), it creates an incentive to hold it, with higher demand pushing its price higher
- Lido users are able to mint stETH at 1-to-1 at any point, which creates an arbitrage opportunity if it ever were at a premium, but there currently is no equivalent arbitrage creating buying pressure when at a discount since staked Ether cannot be redeemed until after the merge
The recent market crash has seemingly led to the market to weigh more strongly the risks associated with stETH than its benefits, thus leading to its value to drop below 1 ETH, even if every stETH is backed by the equivalent amount of Ether.
Over-Collateralized > Algorithmic? The market has also seemed to favor over-collateralized stablecoins following the UST crash
- MakerDAO’s MKR token has been one of the best performing assets this week, growing by over 25%
- FRAX, currently the largest algorithmic stablecoin after UST’s collapse, was able to hold its $1 peg, but saw its market cap drop by nearly 50%
- As the market goes into a risk-off stance, investors are opting more for decentralized over-collateralized stablecoins than their under-collateralized, algorithmically-pegged counterparts
Meanwhile, Tron’s USDD and Near’s USN have just entered the algorithmic stablecoin space, luring users with high yields. Will these be able to avoid UST’s fate or are they simply following a flawed structure?
Wallet Infrastructure Levels Up
While market uncertainty continues to make noise, large institutions have shipped major upgrades aimed at improving user experience in crypto. Just this week we saw the following:
- Coinbase enabling use of Ethereum decentralized applications directly through its main mobile app (instead of its wallet)
- Ledger announcing Ledger Connect, a wallet browser extension aimed to facilitate secure and seamless use of web 3 applications
- Robinhood announcing a non-custodial wallet under development
As interactions with crypto applications become easier, the ecosystem should attract more users as opposed to speculators.
Via IntoTheBlock’s Ethereum network indicators
Ethereum Holders 📈 Transactions 📉
- The number of Ether holders is currently at an all-time high of nearly 76 million addresses with a balance
- Meanwhile, the number of transactions on the Ethereum network reached an all-time high in May 2021 and has been trending slightly downwards since
- While high fees are certainly a factor impeding transaction growth, increased simplicity and broader availability of wallets could help close the gap between Ethereum holders and users
Via IntoTheBlock’s new NFT Insights
Can NFTs Continue Growing Parabolically? 2021 was the breakout year for NFTs as they broke into the mainstream
- The number of NFT holders more than tripled in 2021 and continued to grow rapidly in Q1 of 2022
- NFTs have managed to attract new users into crypto and different use-cases along with them
With simpler and wider wallet infrastructure available, the amount of people using NFTs and crypto broadly is poised to continue to grow. While in the short-term this may not seem to be the case, the building blocks for the space’s long-term growth continue to be set in place.
Sign up for our next webinar. Limited amount of free seats available.
Ethereum is approaching its most anticipated upgrade ever: the merge. The merge is one of the major milestones towards ETH 2.0, bringing with it several benefits to users and holders alike.
In this webinar we will dive into how the merge will work and its implications for the future of Ethereum. We will analyze key metrics surrounding Ethereum’s security, staking rewards and more, while also providing a long-term outlook following the merge.
Sign up here
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.