The price of cryptocurrencies has started to rebound. Yesterday Ether led the market upwards, going to nearly $400 level thanks to Grayscale Ethereum product ETHE becoming an SEC reporting company that reduced its investors holding period in half to six months.
This news could bring with it “a raft of arbitrage opportunities for market participants trading across retail-focused venues vs. the more institutionally focused venues,” says Denis Vinokourov of Bequant.
Additionally, given Ethereum’s use as a hedge to DeFi exposure, “the development may result in a short squeeze, further exacerbating the likely outperformance against its large-cap counterparts,” he added.
Bitcoin also made its way above $11,700, outperformed by ETH, but today, the market is inching down.
However, unlike the strong price action, the fees are returning to normal. ETH fees continue to plummet with average transaction fees currently under $2 from August’s peak of $14.58, following the unprecedented DeFi-driven growth over the summer that topped out in August.
Interestingly, Bitcoin fees are keeping to its trend of going in the opposite direction of Ether, growing by 15.2% week-over-week and averaging about $1M per day. Average Bitcoin transaction fees started going down in Q3 and bottomed at $1.3 towards Sept.’s end only to make its way upwards to above $4 in October.
“Transaction fees currently account for 9.5% of the miner revenue, and have become a far more significant contributor to the miner revenue following the BTC halving in May,” noted Arcane Research. “The miner revenue has not been this influenced by transaction fees since the 2017 bull run.”
Meanwhile, the hash rate of both the top networks is heading north, making new highs. Bitcoin’s hash rate reached a new all-time high this week with the 7-day average hash rate surpassing 140 EH/S, 36% higher since the beginning of this year.
Just like Bitcoin’s strong fundamentals, the Ethereum hash rate also hit a new peak at 254.36 TH/s last week, following the constant growth since mid-July thanks to the rise of DeFi.
“The large increase in fees meant more revenue for miners, which incentivized more miners to join the network and caused hash rate to grow,” noted Coin Metrics.
After rallying hard, September has been a challenging month for DeFi tokens, which crashed hard, potentially finding the bottom. However, the total value locked (TVL) in the ecosystem has jumped past $11 billion.
However, the alpha seeking capital exploiting the DeFi ecosystem could also make a temporary return to join the Ethereum rally. Even Bitcoin could help Ether run higher with Wrapped Bitcoin (WBTC), which continues to accelerate.
Meanwhile, Ethereum has successfully launched yet another dress-rehearsal testnet dubbed Zinken for the upcoming Ethereum 2.0 Phase 0. Unlike the previous failed attempt of Spadina, this was a smooth launch on Monday.
The good news for Ethereum kept on coming at the start of this week, another one in the form of Aztec announcing the launch of Aztec 2.0 — the Layer 2 scaling solution with privacy at its core. The zkRollup based network, live on Ropsten, has private sends by default for ERC-20 tokens on top of scalable private access to DeFi with 200x gas reduction compared to the previous version.