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Useful Vids
ETH Video June https://www.youtube.com/watch?v=lANUSdHg2oc
ETH Video April https://www.youtube.com/watch?v=iWKEKffFz6I
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- TIMESTAMPS -
0:00 Intro
2:11 What Was London Upgrade?
5:19 Impact of Upgrade
8:26 Incoming ETH 2.0
12:49 Bullish Onchain
15:10 Wall Street Adoption
18:12 Options Markets
20:04 Conclusion
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️ Useful Links ️
Helpful Post on EIP 1559: https://medium.com/liquity/how-eip-1559-changes-the-transaction-fees-of-...
Coinbase H1 Report: https://assets.ctfassets.net/c5bd0wqjc7v0/4kKRqK0SCt0DDDjXuo5NRX/fc893f7...
Genesis Trading Report: https://genesistrading.com/about/insights/
Coindesk article on Options: https://www.coindesk.com/ether-options-activity-london-hard-fork
ETH Burn Tracker: https://ultrasound.money/
Tim Beiko Twitter: https://twitter.com/TimBeiko
Justin Drake Twitter: https://twitter.com/drakefjustin
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Why London Important
This was an Ethereum upgrade that incorporated a number of Ethereum Improvement Proposals or EIPs.
One of the most consequential of these was EIP 1559. This was an EIP that has been in the works for some time that would radically change the way that the Ethereum transaction mechanism works.
However, this often created an incentive for miners to bid up these fees through a tactic called miner extracted value or MEV.
The Ethereum London upgrade went through without a hitch. This is bullish for the upcoming 2.0 upgrades.
Impact of Upgrade
ETH started being burned the moment of the upgrade. So far we have over 39k that has been burned. You still have block rewards though.
So, what that basically means is that the ETH inflation rate has been reduced from about 4.2% to 3%. What's important to understand here though is its not deflation, but a reduction in the *inflation rate*.
Fees did not adjust down too much but this was expected.
ETH 2.0 Incoming
When Ethereum progresses to ETH 2.0, then it is likely that the burn rate will exceed the block rewards. This will mean that Ethereum becomes a deflationary asset and "ultra sound" money.
This is all according to projections by the senior Ethereum researcher, Justin Drake.
When you have an asset that is falling in supply year on year, it makes it more rare and hence more desirable.
Bullish Onchain
There has been a massive fall in the amount of ETH that is held on exchanges. This is bullish as it means that this ETH will not be sold anytime soon.
This ETH has either been locked in smart contracts to be used in Defi or it has been sent to the ETH 2.0 deposit contract. Funds that are locked in these smart contracts are unlikely to be sold anytime soon.
Institutional Demand
Large wall street institutions are bullish on ETH. Goldman Sachs has said that there is a high likelihood that it will overtake Bitcoin which as a dominant store of value.
In the Coinbase institutional H1 report, ETH trading volume has literally skyrocketed. Last year, volume was at $92 billion. This year it was $1.4 trillion.
There was the same trend in the Genesis trading report from their OTC desk. Bitcoin trading volume has fallen from over 80% at the end of Q2 last year to roughly 47% of trading volume in Q2 of this year.
ETH volume was less than 5% of Genesis' trading volume last year whereas this year it was up to 25% of Q2 volumes.
ETH Options Bullish
When it comes to pricing assets in the future, it helps to take a look at what is going on in the options markets.
After the London hard fork went live last week, ETH options activity picked up quite a bit. This volume was mostly in CALL options which are a bullish sign.
But it's also the strike prices of these options. The most popular options were those that expired in March of next year with strikes of 50k and 40k.
One more thing that you can look at is the price that investors are willing to pay for CALLs relative to PUTs. The 25 Delta skew has been on a sustained decline which shows that people were increasingly more willing to buy CALLs - bullish.
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Disclaimer
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.
#Ethereum #ETH #Crypto #Cryptocurrency #defi
