Bitcoin (BTC) and Ethereum (ETH) are moving sideways as DeFi tokens hit new highs. The market update.
Ethereum (ETH) is currently hovering between $ 1,600 and $ 1,700. The second largest cryptocurrency fell 1.39 percent in the past 24 hours.
In addition, the Bitcoin price is still struggling to recapture the 38,000 US dollar mark. While BTC and ETH are recovering from their last price rally, many DeFi tokens are continuing their upward trend. They are primarily driven by positive comments from well-known investors who are promoting the advantages of blockchain technology and DeFi. In addition, the ETH transaction fees are reaching a new record level, and the Ethereum network is reaching its limits.
High transaction fees primarily hurt the average user, but Grayscale and Ethereum supporters also see a positive side in this. Because, according to Ryan Sean Adams, high ether transaction fees would only confirm how extreme the demand for ETH is currently. That would indicate that Ethereum is currently undervalued. In addition, it would also show how great the potential of Ethereum is if scaling solutions can be successfully implemented in the coming months and years.
Citing a research paper by Grayscale published this week, Adams claims that Ethereum would actually get cheaper and cheaper if you put market capitalization in relation to the transaction fees generated by the Ethereum network.
The so-called price-to-sales ratio (KUV) is also used in the traditional financial world to value companies. The lower the KUV, the more attractive an investment is. While there is currently still a debate about how applicable this benchmark is to decentralized protocols, it sheds new light on Ethereum.
According to Grayscale , ETH with a KUV of 0.02 has never been as low as it was in 2021. In addition, Grayscale comments on this fact as follows:
A lower KUV suggests that the network is generating high revenue relative to historical market capitalization and therefore may be undervalued.
In addition, the high transaction fees are a good indicator that there is high demand for Ethereum, which is also good news for miners and long-term investors, albeit not for those who want to use the network on a daily basis.
DeFi tokens, in particular, seem to have benefited enormously from the previous ETH price rally in the past few days. The capital tied up in the DeFi sector is at a new high, and several DeFi tokens are reaching a new all-time high.
Universal Market Access (UMA) rose more than 200 percent in the past seven days, hitting a new all-time high at $ 41.56. But not only the DeFi derivative project UMA reached a new all-time high, but also the decentralized exchange (DEX) 0x (ZRX). Today alone, ZRX’s price skyrocketed 78.25 percent and is at $ 1.38 at press time.
In addition, several DeFi lending projects also recorded an extreme price increase. Aave (AAVE), Compound (COMP), and Maker (MKR) each reached a new all-time high and pulled the “ ETF token” Defi Pulse Index (DPI) to a new high. DPI is made up of the 10 largest DeFi tokens and is therefore repeatedly used as a benchmark for the performance of the entire DeFi sector.
In addition, the emerging Ethereum sector has received a lot of attention in recent days from entrepreneur Mark Cuban. In the famous Reddit group r / wallstreetbets, he discussed DeFi with community members. Mark Cuban also revealed that he holds Aave (AAVE) and SushiSwap (SUSHI) tokens.
It has also become obvious that Grayscale is also becoming more and more interested in the emerging DeFi sector. The asset manager finally registered a new trust last week. This trust will soon give large investors the opportunity to invest in the DeFi sector.
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