In brief

  • Ethereum surpassed its previous all-time-high over the weekend.
  • The boom comes thanks to the surge in DeFi.
  • US markets are set to be volatile this week as earnings reports and US economy data is published.

January is all about Ethereum. The world’s second largest cryptocurrency by market cap has been surging in 2021, and over the weekend, broke through its previous all time high of $1,439. A record it set only a week before. 

In fact, on January 1, Ethereum’s price sat around $730, but in the last 25 days has doubled, according to data provider Nomics. Compared to Bitcoin, which has had a bumpy start to the year, Ethereum’s year to date growth is around 88%, where as Bitcoin’s is only 10%. What’s going on here? 

DeFi is back. The catch all term for decentralized finance or projects that provide access to lending and staking services has come back to life. 

After the summer of 2020 which saw projects offer 1,000% returns on staking pools, but little transparency over how those pools operated, the more established players appear to have hit a purple patch. 

Aave, an open-source protocol for borrowing and lending is up 11% over the last 24 hours, on the back of four days of strong growth. 

Uniswap, and its underlying governance token, UNI is up 20%, as is the Synthetix Network Token - a decentralized payment network - which saw 7% gains in the last 24 hours. 

Even SushiSwap, the decentralized exchange that epitomized the highs, and the lows of the yield farming craze of 2020, is up nearly 10%, and its underlying token SUSHI, has beaten its previous all time high price of $8.71 set on September 1, 2020. 

All of which helps to push up the price of ETH, as these projects all use Ethereum’s ERC token standard to create new tokens. This has led institutional investors - those big buyers who went in search of exotic assets after the March 2020 market crash and found Bitcoin - to take a closer look at Ethereum as another investment with huge potential. 

Futures contracts, a key avenue for investors to gain exposure to crypto price movements, broke all-time-highs last week as $4.5 billion worth of bets were placed on Ethereum’s price. 

Trading volumes on the network have also shot up. More than $1 trillion in transactions passed through Ethereum in 2020, putting it roughly on par with payments giant, PayPal. All of which suggests the Eth bull run is set to continue. 

Earning results and Fed meeting play key role for markets  

It's a busy week for market watchers. The Federal Reserve is due to make a statement on interest rates and its aggressive asset purchase program designed to keep the markets moving this week. Data for Q4 of the US economy is due to be published and Facebook, Apple and Tesla are all due to report earnings for the fourth quarter this week.

With the Fed, it appears unlikely it will take its foot off the gas of its asset buying program, currently hitting $120 billion per month, effectively underwriting the markets. Interest rates are also set to remain the same until at least 2023.

The US economy's performance in the tail end of 2020 is expected to be up around 4%, which is good but not as impressive as the third quarter, which saw a 33% spike in the growth of the economy.

Lastly, earnings reports this week are focused on companies that have benefitted strongly from COVID conditions, namely Apple and Facebook. Tim Cook's company is expected to post record breaking revenue for the last quarter. Mark Zuckerberg's beleaguered Facebook group is expected to show continued growth in its ad business despite a mass exodus from its WhatsApp messenger platform and a boycott by some advertisers of the platform last year.

It's going to be a busy week.

Sponsored post by AAX

Learn More about partnering with Decrypt.

Daily Debrief Newsletter

Start every day with the top news stories right now, plus original features, a podcast, videos and more.