Cointelegraph By Joseph Young
The price of Ether (ETH), the native cryptocurrency of Ethereum, achieved a new all-time high on Feb. 9, 2021. On Binance, ETH rallied to as high as $1,830 merely hours after it started to trade on CME.
Why is ETH rallying after the CME listing of any importance?
The timing of the ETH rally to a new record-high is noteworthy because of the negative sentiment around it prior to the listing.
In December 2017, CME listed the Bitcoin futures contract for the first time. Within weeks, the price of Bitcoin crashed from $20,000 to around $6,000.
Many traders and analysts were expecting ETH to fall in a similar manner to BTC after Bitcoin futures went live on the CME in December 2017.
However, there are two misconceptions about this theory. First, there is no way to prove that the CME Bitcoin futures listing was the catalyst that caused BTC to plummet in the weeks that followed.
Second, other than that unprovable theory, there is no clear reason to perceive CME listing ETH as a bearish event.
The difference between 2021 and 2017 is that there is unprecedented institutional demand for Ether and cryptocurrencies in general. As Cointelegraph reported, Tesla purchased $1.5 billion worth of Bitcoin, which is nearly 10% of its cash holdings.
There is a strong chance that the institutional demand for Bitcoin could translate into rising demand for ETH. In this sense, the CME listing could be a major catalyst for Ethereum in the longer term.
Ryan Seans Adams, an Ethereum investor and researcher, said:
“ETH futures go live on the CME today This is huge. This is a bridge to institutions. This is a green light from U.S regulators. ETH is becoming globally accepted commodity money.”
CME listing will be a catalyst for Ethereum
Researchers at the CoinMetrics team said in a note that they believe CME’s ETH futures launch could accelerate inflows of ETH into the Grayscale Ethereum Trust (ETHE).
If the institutional appetite for Ethereum rises as a result and Grayscale inflows spike, this would likely cause both the short-term and long-term sentiment around ETH to rapidly improve. The researchers said:
“CME’s launch may potentially accelerate ETH inflows into Grayscale’s Ethereum Trust (ETHE) – investors can buy into the Grayscale Trust while simultaneously shorting ETH, remaining market neutral and pocketing the ETHE premium. Grayscale’s Ethereum trust does not currently have a method for withdrawing ETH so it effectively serves as a large token sink for ETH.”
Analysts at Arcane Research found that the ETH futures contract achieved a $30 million daily volume on its first day, which is relatively high.
As the volume continues to increase, it would show that institutions are also considering ETH as a potential investment. The analysts said:
“ETH Futures launch on @CMEGroup Bank The first day of trading for CME’s ETH Futures ended with over $30 million in volume and $20 million in open interest.”
One of Switzerland’s leading banks now offers crypto trading
Cointelegraph By Brian Quarmby
Bordier & Cie, a Swiss financial institution operating for more than 170 years, has announced a partnership with digital asset bank Sygnum to allow its customers to purchase crypto assets.
The integration with Sygnum’s business-to-business banking platform allows Bordier’s clients to purchase Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and Tezos (XTZ).
The announcement describes the move as “lay[ing] the foundation for a broader offering of regulated digital asset products and services,” including options and tokenized asset classes. Bordier managing partner Evrard Bordier said:
“By partnering with Sygnum Bank, we are providing our clients with a one-stop, integrated solution while empowering them to invest in this new, high growth asset class with complete trust.”
Bordier noted the move was driven by increasing demand from clients looking to diversify their portfolios with new assets. The firm emphasized the lack of correlation between the cryptocurrency and mainstream financial markets, describing crypto assets as a “powerful tool to enhance diversification and achieve superior risk-adjusted returns.”
Bordier & Cie is a Geneva-based private banker founded in 1884, that has been owned and managed by the Bordier family for five generations. The bank’s introduction to crypto follows that of many other large institutions looking to adopt cryptocurrency in 2021.
Ethereum exodus continues as Binance ‘helps,’ Feb 17–24.
Cointelegraph By Andrey Shevchenko
The parabolic rise of the Binance Smart Chain has been all over the news this week, aided by a few seemingly unfriendly moves by the exchange itself.
It started on Friday, when Binance suddenly froze withdrawals of Ethereum-based assets for about one hour. Many interpreted it as a move against the blockchain and its ecosystem, given that the cited reason was “congestion issues” — something one hardly imagines is a problem for an exchange, unless they shoulder withdrawal costs for the user.
The day after, FTX started shaming Binance for excessive promotion of BSC on the exchange. Specifically, FTX was apparently “spending millions” in failed deposits that came over the Smart Chain but were meant for Ethereum. FTX’s accusation toward Binance, one of its investors, is that the exchange put BSC as the default option for withdrawing many ERC-20 assets, which caused a lot of failed deposits to FTX.
I can’t say I’ve ever noticed Binance Smart Chain being “the default option” for withdrawals. BSC is the first listed when you attempt to withdraw something like USDC, though it does not actually select the blockchain for you. Still, I can see how some newbies could get swindled by this. People overestimate the degree to which terms like “ERC-20” are known in the casual crypto community. Testing the withdrawal now, Binance forces you to go through a quiz where you confirm you know what you’re doing by selecting BSC. I have no idea when this was introduced, but it’s not impossible that it’s a response to FTX’s statements.
Overall though, there’s nothing inherently wrong with one company using its products to promote another of its products. From the official responses it seems that the Ethereum congestion incident won’t happen again because they “upgraded the systems.”
Cheap tricks would never be able to undermine Ethereum without there being an underlying fundamental weakness. And I think we’ve all had enough with Ethereum gas fees. I tried a non-Ethereum DeFi product recently, and it felt so good to pay just a few cents for a complete interaction.
Binance Smart Chain is already processing more transactions than Ethereum and has over 5 million unique wallets. Ethereum, with its much longer history, is currently sitting at 140 million wallets in total.
Ironically, Ethereum fans should secretly want the bull market to end right now. The longer it goes on, the more gas fees will remain high, and the more people will want to migrate away and seed other environments.
Second largest liquidation day in DeFi history
Speaking of the end of the bull market, a massive slide in crypto markets triggered some $24 million in liquidations on Tuesday, the second highest loss in DeFi history. It would’ve been the highest if not for that infamous day in November when Compound thought Dai was worth $1.3.
The firesale was triggered by nothing in particular, though I suspect that rising bond yields are having their effect on the riskiest of assets on Wall Street, of which Bitcoin is the quintessential representative. And then Bitcoin dragged the rest of crypto with it.
I don’t normally talk about price because I’m not a financial advisor or even a successful trader. But I am feeling a lot of fundamental and sentimental indicators of a coming correction, ranging from a wavering stock market to, well, the strength of Tuesday’s dump.
To top it all off, my non-crypto feeds are being invaded by crypto stuff, which is never a good sign. I certainly hope that I’m misinterpreting what is actually unprecedented adoption and acceptance, but let’s face it — it’s all about price for now, while fundamentals are still lagging.
With layer two platforms and new blockchains coming online, we may get something useful out of crypto and DeFi soon. But everything could happen before we get there. Be especially careful right now and, most importantly, don’t get liquidated.
In other news
DeFi user pays $36K for one Uniswap transaction, as EIP-1559 draws closer
Cointelegraph By Martin Young
Ethereum fees are at record level but even so, one Uniswap user paid well over the going rate with a gas fee of $36,000 for a single transaction.
Crypto twitter has been flooded with complaints about the unsustainable fees for using the Ethereum network but the rates only exacerbated one DeFi user’s fat fingered mistake.
The exorbitant transaction was tweeted by co-founder and CTO of Groundhog Network, Andrew Redden, who confirmed it was Uniswap related.
Presenting: The most expensive approve https://t.co/WQvgjZWFug
— Andrew Redden ️ (@androolloyd) February 23, 2021
The ludicrous fee turned out to be a typing error as the user manually entered two prices in gwei together. The fee of 500,801 gwei should have been one (500 gwei) or the other (801 gwei) but not both.
It came to a whopping 24.94 ETH, or approximately $36,000 at the time it was made.
Average transaction fees have skyrocketed to an all-time high of around $40 according to Bitinfocharts.com, after surging more than 1,000% since the beginning of the year. Etherscan’s gas tracker is reporting an average of $23.85 for an ERC-20 transfer and $73.79 for a Uniswap swap at the moment.
An Ethereum improvement proposal called EIP-1559 may help to alleviate some of these fee problems and developers hint that it could be rolled into the Ethereum ‘London’ upgrade scheduled for July, 2021.
On Feb. 23, Ethereum lead developer Tim Beiko posted an update on EIP-1559 in which he said “large state testing is 99% done.” A developer call on March 5 will confirm whether the EIP will be included in the London upgrade, he added.
The current system of gas calculations involves a bidding system for transactions where the miners naturally prioritize the highest bids, and the lower ones take much longer. EIP-1559 will modify this auction system by dynamically adjusting the fees so users will pay the lowest bid for the block. This enables automated market makers and wallets to accurately calculate fees and provide better estimations. Beiko elaborated;
“Another way of looking at this is that 1559 makes the inclusion price of transactions explicit in the protocol, rather than implicit, as it is right now.”
The proposal will also burn gas fees which are paid in ETH and this will have a longer-term impact on Ethereum issuance and supply. Naturally, the miners have voiced disapproval at this though network co-founder Vitalik Buterin has commented (in Chinese) that any opposing action they take may simply accelerate the move to PoS.
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