Ethereum Turns Deflationary Again as Network Activity Spikes
November 27, 2023
Subscribe to our newsletter
Thanks to improved dApp metrics and renewed NFT dominance, Ethereum confidently surpassed $2,000 last week and has turned deflationary once again.
However, Bitcoin didn’t let Ethereum have all the glory.
Accompanied by BlackRock and Grayscale’s SEC rendezvous for a potential ETF green light, BTC soared above $38,000 for the first time since May 2022.
Meanwhile, crypto stocks and digital asset products kept the positive vibes flowing with gains and consistent inflows, and Bitcoin’s hashrate highs added to the mix which means we are starting the new week with a blend of optimism and speculative anticipation.
Let’s dive into this week’s round-up.
Ethereum back above $2K as network activity spikes
Ethereum has regained its momentum, climbing above the $2,000 mark, driven by notable improvements in decentralized applications metrics, escalating protocol fees, and Ethereum’s continued dominance in the nonfungible token arena.
Checking the pulse of the Ethereum network’s health via dAppRadar, dApps on the platform achieved an impressive total value locked of $48.64 billion over the last 7 days, a 0.5% increase from the previous week.
Ethereum has also successfully reclaimed its lead in NFT sales, recording a substantial $127.93 million over the same 7-day period. A 60% increase from the week prior.
Despite a brief period where Bitcoin took the lead in NFT activity, Ethereum now continues to be the preferred blockchain for prominent NFT projects.
While Ethereum’s market capitalization stands at $248 billion, trailing behind Bitcoin’s $728 billion, both networks are generating comparable protocol revenues.
In the last seven days, the Bitcoin network accumulated $57.5 million in fees, closely trailing Ethereum’s $54.3 million.
These additional fees from Ethereum’s network activity have resulted in the coin, once again, turning deflationary.
Data collected by ultrasound.money indicates that after a brief moment of inflation, the supply of ETH is decreasing.
Bitcoin peaks above $38,000 as BlackRock and Grayscale meet SEC
Bitcoin, the leading cryptocurrency, has reached new heights not witnessed since May 2022.
The digital asset briefly touched $38,000 early on Friday morning before settling around $37,500 over the weekend.
The surge in Bitcoin’s price occurred against the backdrop of subdued trading in traditional markets, following the U.S. Thanksgiving holiday.
However, investors continue to watch developments, particularly in anticipation of a potential approval from the U.S. SEC regarding a spot Bitcoin exchange-traded fund, and were excited to see both BlackRock and Grayscale convene with the SEC during the week.
According to Bloomberg analyst, James Seyffart, representatives from BlackRock and the Nasdaq met with the SEC on Wednesday, to present different redemptions models for the proposed iShares Bitcoin Trust.
On the same day, it was revealed via an SEC memo that Grayscale had also met with the SEC on November 20 to discuss its proposal to convert its popular Bitcoin Trust (GBTC) into a Spot Bitcoin ETF.
The ongoing discussions with the SEC are seen as a positive step towards a Spot Bitcoin ETF approval, however, nothing remains guaranteed.
Alongside Bitcoin’s progress, crypto stocks also experienced positive momentum throughout the week.
Coinbase’s COIN surged by 6%, Stronghold Digital Mining (SDIG) saw a rise of 6.4%, and Marathon Digital Holdings (MARA) gained 4%.
Crypto products attract investment for back-to-back weeks
Digital asset investment products recorded significant inflows, once again, amassing a total of $176 million in the past week.
This marks the eighth consecutive week of positive investment activity, signaling sustained confidence in the cryptocurrency market, according to insights from CoinShares.
The dominance of Exchange-Traded Products in the total crypto volume is on the rise, averaging an impressive 11 percent.
According to Coinshares, this surge is in stark contrast to the long-term historical average of 3.4 percent and surpasses the averages witnessed during the 2020/21 bull market.
Bitcoin remains a primary driver of this positive trend, attracting $155 million in inflows. CoinShares attributes this ongoing positive sentiment to the anticipated approval of a spot-based Bitcoin ETF in the United States.
Diversification is also apparent in the inflows to various altcoins, with notable performances from Solana, Ethereum, and Avalanche, attracting $13.6 million, $3.3 million, and $1.8 million, respectively.
Geographically, Canada, Germany, and Switzerland continue to experience notable inflows, recording $98 million, $63 million, and $35 million, respectively.
In contrast, the United States observed outflows from futures-based products, totaling $19 million.
Bitcoin’s hashrate reaches all-time highs
Bitcoin’s hashrate has surged to unprecedented levels, setting a new record as the cryptocurrency landscape gears up for the upcoming halving event scheduled in just five months.
As of Sunday, data from Blockchain.com reveals that the total Bitcoin hashrate had reached an impressive 502.5 exahashes per second (EH/s).
Hashrate, a key metric representing the amount of computing power utilized per second, is pivotal in fortifying the security of the Bitcoin network.
A higher hashrate renders it more challenging for potential attackers to gain control over 50% of the network, ensuring its resilience against malicious threats.
The heightened hashrate reflects increased mining activity worldwide, as miners expand their operations, deploying more machines to maximize profitability.
In preparation for the upcoming halving event, where the rewards for miners will be halved, miners are strategically investing in more efficient machines.
The impending Bitcoin halving, scheduled for April and marking the fourth occurrence since the cryptocurrency’s inception in 2008, is widely perceived as a bullish indicator for the market.
This event, inherent in the Bitcoin protocol, aims to curb BTC inflation by halving the issuance of new coins every four years.
With a fixed supply of 21 million coins and over 19.5 million already in circulation, the halving is expected to stimulate demand for existing BTC, further shaping the dynamics of the cryptocurrency market.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cloudflare sets this cookie to identify trusted web traffic.
The _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
This cookie is installed by Google Analytics.
A variation of the _gat cookie set by Google Analytics and Google Tag Manager to allow website owners to track visitor behaviour and measure site performance. The pattern element in the name contains the unique identity number of the account or website it relates to.
Provided by Google Tag Manager to experiment advertisement efficiency of websites using their services.
Installed by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
5 months 27 days
This cookie is set by the Google recaptcha service to identify bots to protect the website against malicious spam attacks.
This cookie is managed by Amazon Web Services and is used for load balancing.
This cookie is used for authentication and for secure log-in. It registers the log-in information.
Set by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category .
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
Records the default button state of the corresponding category & the status of CCPA. It works only in coordination with the primary cookie.