Dispatch #19: A New All-Time High for Ethereum and DeFi

In this patch of your weekly Dispatch:

• Ethereum breaks its previous high of $1,420
• The NEXO Token hits brand new ATH
• Blackrock files to invest in BTC futures
• Coinbase M&A suggests a new area of competition for crypto companies

The Big Idea

A New All-Time High for Ethereum

Last week, we discussed the idea that Bitcoin might be giving way to Ethereum in the focus of crypto traders and investors.

This week, the granddaddy of the alts, Ethereum itself, finally claimed a new all-time high, exceeding the mark of $1,420 widely accepted by the community as the previous high-water mark.

If Bitcoin has been on a tear in 2021, Ethereum has been even more so, nearly doubling since starting the year at around $740.

There are many reasons for this. First, of course, is the momentum provided by Bitcoin for all other cryptocurrencies, and the profits that might have been recycled into ETH.

Likely more explanatory, however, is the incredible pace of development around decentralized finance infrastructure. Every day, it seems, some new product is launching and pushing the boundaries of what we can do in our new open, permissionless financial system.

Perhaps appropriately then, the same day that ETH hit its USD all-time high, the total value locked in DeFi also hit a new record of $25B. Even as impressive as this growth is, we have to say: it still feels like just the beginning of what could be a remarkable year.

The Latest In…

Bitcoin & Institutions

Bitcoin has continued to roll sideways in the mid $30,000s, but that hasn’t stopped it from picking up even more institutional acolytes. The headliner this week is Blackrock – aka the biggest asset manager in the world with $8.7T in AUM – who SEC filings show has cleared two of its funds to invest in Bitcoin futures. We also got insider reports that Goldman Sachs – one of the most vocally crypto-disinterested institutions historically – would be offering crypto custody soon. My, how the times are changing…

The Latest In…

Regulations

This week saw the inauguration of President Joe Biden in the United States, and with Biden comes a whole new administration and a new set of attitudes and ideas about the crypto industry. While some news points positively, such as the appointment of Gary Gensler (who has taught about blockchain at MIT) as SEC Chairman, recent comments by future Treasury Secretary Janet Yellen were less encouraging. Yellen argued that crypto was “mainly” used for illicit financing. This outdated idea has been thoroughly debunked – most recently by this week’s 2021 Chainalysis report that suggested only 0.34% of crypto transactions are for illicit purposes. Also, FinCEN, anyone..?

The Latest In…

M&A

Here’s a fun one. Coinbase has acquired Bison Trails, a crypto infrastructure provider. Terms of the deal weren’t disclosed but it is widely assumed to be on par with Coinbase’s previous Tagomi and Earn.com acquisitions, tipping the scales above nine figures. The more interesting thing is the implications. It seems likely that now that banks and other traditional financial institutions have been given the greenlight to engage deeply with crypto, they’re going to want to offer crypto products to their customers. A Coinbase-Bison Trails pair could theoretically provide the infrastructure for a white-label service to do exactly that. Something to watch!

The Latest In…

Central Bank Digital Currencies

We tend to think that 2021 is going to be a big one for CBDCs. A couple stories this week provide evidence for that, especially when it comes to Europe. The French central bank is in the midst of a trial for a CBDC for interbank settlement. The European Commission and the ECB also issued a statement on Tuesday about a new collaboration to explore potential design and technical issues that could arise. The ECB is now considering whether to start a digital euro project towards the middle of the year, following close in the footsteps of China. Finally, the Bank of International Settlements, aka the ‘central bank of central banks’, is mapping out a series of CBDC trials worldwide in 2021.

The Week’s Most Interesting Data Story

Bitcoin’s Liquidity is Still Decreasing

Let’s be honest. Bitcoin is not having a very good week in terms of price. However, for all the FUD out there, the data is telling a very clear story when it comes to Bitcoin liquidity. Bitcoin continues to be pulled off exchanges in a significant way. This happens when Bitcoin holders move from trading to long-term storage – a bullish indicator for the space as a whole. It appears that, despite the price taking a beating, high-net-worth individuals and large institutions are continuing to accumulate and move their holdings into custody.

Hot Topics

What the Community Is Discussing

The new ETH all-time high has excitement about the future of Ethereum ramping up as well.

This conversation ended on a surprisingly different note and more positively than it started.

An easy-to-follow thread about the double-spend that never happened.

Our Take

The NEXO Token This Week

It’s been a mixed week for crypto. As Bitcoin consolidated and then slided south, it wasn’t just Ethereum that got an ATH. Our very own NEXO Token reached a new all-time high of $0.774 on Tuesday. If that’s not a telltale sign of the rotation of money into altcoins, we don’t know what is.

With our recently increased LTV ratio for the NEXO Token, which allows you to withdraw a bigger credit line with the same amount of crypto, and all the other feature updates in our pipeline, it is shaping to be a splendid year for yours truly.

And you know what, @souljaboy is checking out #HODLing opportunities with Nexo.

What to Watch for Next Week:

• Can ETH consolidate about its all-time high?
• Will Bitcoin continue going sideways, head back up, or crash back down?
• Will any more new Biden officials discuss crypto?