Ethereum has made another leg up against Bitcoin, with the ETH/BTC chart tagging its highest level since May 2018.
On Dec. 1, ETH traded for 0.0837 BTC after rallying 12% over three days to test prices not seen since May 2018. The move coincides with combined total value locked (TVL) of the DeFi sector posting a new record high of $277.6B, according to DeFi Llama.
However, Ether is still down 52.4% from its June 2017 high of 0.176 BTC. Ether also posted a secondary top at nearly 0.123 BTC when the bull market ended in January 2018.
The current bull cycle has seen Ethereum steadily gain 423% over Bitcoin since hitting a local low of 0.016 BTC in early September 2019. Ethereum has recently been range-bound between roughly 0.058 BTC and 0.083 BTC since quickly rallying by 174% during April of this year.
Compared to the previous cycle, commentators, including Anthony Sassano, the host of The Daily Gwei, have argued that the Ethereum market exhibits much stronger fundamentals owing EIP-1559’s introduction of a burn mechanism to Ether’s fee market, plus surging on-chain activity from the DeFi and NFT sectors.
According to Ultrasound Money, more than 1.076 M Ethereum has been destroyed (worth nearly $5.09B at current prices) since 1559 went live in August, equating to 6.3 Ether burned every minute. However, Ether has been destroyed at a rate of nearly 8.4 ETH per minute over the past 30 days.
Surging NFT marketplace OpenSea is the single-largest source of burnt Ethereum, having destroyed nearly 11% of the total burn thus far. Simple ETH transfers are second with roughly 10%, followed by decentralized exchange Uniswap v2 with 9.2%, stablecoin issuer Tether with 5.4%, Uniswap v3 with 3.4%, and popular wallet MetaMask with 2.3%.
Ethereum’s forthcoming merge with the Eth2 beacon chain may add more deflationary pressure on the markets through a reduction in new supply issuance. Investors may be accumulating ETH in anticipation of a deflationary Ethereum 2.0. However, not everyone is convinced Ether will see new highs despite prices coming so close to the previous record earlier Wednesday.
According to CoinGlass, seven of the 10 largest Ethereum futures contracts by volume have seen strong selling pressure compared to buying over the past 24 hours, suggesting many speculators are covering or hedging their positions. Nine of the 15 largest ETH perpetual contracts have similarly seen stronger selling over the last day.