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October 31, 2020
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Ethereum under pressure from DeFI: can Bitcoin capitalize on it?

2020 DeFi boom on Ethereum blockchain surprised most crypto community

The year 2020 saw Ethereum [ETH] briefly taking the leadership of Bitcoin in the market, however, this growth was a result of the boom witnessed by the decentralized financial ecosystem, DeFi.

According data provided by Skew, the volatility of Ethereum and Bitcoin prices are converging. The convergent spread of the implied volatility of Ether-Bitcoin 6 months [ATM] fell to 7.5%, since the observed peak of 21% on September 1.

Source: Skew

This was the sign of an Ethereum retracing, with Bitcoin once again taking the lead. This was also mainly due to the DeFi, which created enormous pressure on the Ethereum blockchain, especially with Uniswap launching its UNI governance token.

The launch caused transactions on the blockchain to multiply and with that the rates also increased. Glassnode’s data suggested that this growing number of transactions and the high cost of gas resulted in users spending $ 1 million in a single hour on September 17.

This should all be seen in a context where the Bitcoin market was seeing the value of the digital asset once again approaching $ 11,000 and interest among institutions and retail platforms remains high.

Ethereum options expiring

Although the spot market has become dependent on DeFi, the options market has suggested that the maturity would be huge. Ethereum’s open interest options until maturity reported that around 600,000 ETH option contracts were due to expire between today and the end of the month.

Ethereum under pressure from DeFI: can Bitcoin capitalize on it? 15

Source: Skew

This maturity was a conflicting sign, as other metrics highlighted the market downturn.

To put things in perspective, the Put / Call ratio was suggesting that put options were taking the lead, since the ratio had reached 0.86. The downturn was growing and with the 150.6 thousand ETH options contract expiring today, the market sentiment will become clearer.

Source: AMBCrypto

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