Bitcoin breaks $10k as Ethereum surges

The cryptocurrency market is riding higher on a raft of positive news. Ethereum has smashed through $300 for the first time since July 2019, and Bitcoin has broken the psychological barrier of $10k.

This sudden surge marks an abrupt end to an extended period of low volatility, and suggests Bitcoin’s correlation with the S&P 500 could be abating. Major stock indices have remained relatively flat over the past week, while the leading cryptocurrency has risen almost 12%.

Instead of following stocks, the crypto market now appears to be marching to the beat of its own drum, with Ethereum benefiting from the increased flow of funds into DeFi apps, and Bitcoin buoyed by news of mainstream adoption.

This Week’s Highlights

  • Adoption Spurs Price Appreciation
  • DeFi Drives Ethereum Rally

Adoption Spurs Price Appreciation

Positive news has come thick and fast in the past week. Not only has PayPal confirmed that it is jumping on the cryptocurrency bandwagon, but Visa has laid out its own vision for digital currency, and the Office of the Comptroller of the Currency has published a letter stating that all national banks can offer digital asset custody.

Meanwhile at a grassroots level, trading volume on peer-to-peer exchanges in emerging markets is picking up. African countries in particular have a rapidly growing appetite for cryptocurrency, according to data aggregator Useful Tulips.

DeFi Drives Ethereum Rally

Ethereum has surged 36% over the past seven days to surpass $300 for the first time since July 2019. The second-largest crypto by market cap is now up over 150% in 2020—three times more than bitcoin’s own 44% rise.

Blockchain data firm Santiment suggests the rally is being driven by the explosive growth of DeFi, which has led to a surge in the number of Ethereum addresses and a massive rise in the total value locked in smart contracts on the network. On Tuesday last week, the amount locked in DeFi apps hit $3 billion, according to DeFi Pulse. Three days later, the figure had jumped to $4 billion. 

However, while the price of Ethereum is benefiting from the network’s popularity, limitations are coming into view, with congestion leading to soaring fees and delayed transactions.

The Week Ahead

After such a long period of consolidation, the bullish breakout could be expected to yield a sustained uptrend. This upwards momentum could be supported by the rally of traditional safe haven asset gold, which has moved in tandem with bitcoin over the last few days and is now in price discovery mode after hitting an all-time high early today.

On the flipside, the weekend volatility means Monday’s CME Bitcoin Futures session has opened $300 above last week’s close, creating a gap at $9,600 which could draw the price downwards.

Looking further ahead, the close of July’s monthly candle on Friday is likely to give a clearer indication of long-term market momentum.