Ethereum Hits Five Week High as DeFi Rallies

Maybe these are famous last words, but the weekend rebound in crypto doesn’t feel like a dead cat bounce.

Ether surged to its highest level in five weeks and other DeFi names finally shook off the doldrums and posted handsome gains of their own. Many top DeFi projects increased since posting a local low on July 13. Uniswap is up 33% in the last seven days, and Aave jumped 38%.

The rally follows a devastating second quarter for crypto and DeFi, with the sector losing two-thirds of its market value since early April. The value of assets locked in DeFi protocols also evaporated, tanking 65% to $83.1B.

Round of Buying

ETH has jumped 4% in the last 24 hours in mid-morning trading U.K. time Tuesday, and 39% in the last seven days, according to CoinGecko. While ETH spent the past three weeks swinging between the $1,000 and $1,300 range, on July 16 it broke through $1,300 and apparently triggered a round of buying.

In contrast, BTC is down 1.8 % in the last 24 hours and up 9.3% in the last seven days, according to CoinGecko.

ETH/USDT Source: TradingView

Three of the top 100 DeFi tokens by market cap are up more than 150% for the week, including the governance token of the sector’s tenth-largest project, Lido. Just eight of the top 100 tokens posted weekly drawdowns, with Neutrino System Base suffering the largest pullback with just 6.4%.

Bullish Momentum

CoinGecko estimates the combined capitalization of DeFi projects is $44.7B, up 22% over five days. The sector represents 4.2% of the global crypto market cap, and is one-quarter of the size of Ethereum’s capitalization.

Despite the bullish momentum for DeFi tokens, the total value locked (TVL) in DeFi has produced a weaker recovery so far, with combined TVL up by 15% over the same period at $83.1B, according to DeFi Llama.

Combined DeFi TVL. Source: DeFi Llama

Ethereum-based DeFi protocols are outperforming the sector’s average, increasing TVL by more than 18% from the local low on July 13. Ethereum now represents $52.6B in TVL, equal to 58% of the combined TVL.

By contrast, top Ethereum Virtual Machine (EVM)-compatible Layer 1s Binance Smart Chain, Avalanche, and Solana have added between 9.5% and 11.5% to their TVLs over the same period. Leading Ethereum Layer 2s are also underperforming compared to Ethereum, with L2beat estimating the sector is worth $4B after gaining 11% in five days.

Tron is the only major network to post consistent growth throughout July, growing from $4B to $5.86B since the month began. The growth can predominantly be attributed to the Tron-based money market protocol, JustLend, which has grown 120% to represent a TVL of $3.3B since the end of June and represents 57% of the network’s locked value.

Updated on July 19.