The Rise of DeFi: Crypto Market Report July 2020
DeFi takes centre stage in July as token returns outpace the wider cryptocurrency market.
The Rise of DeFi
DeFi applications are becoming more popular and sparking a bullish run in crypto-assets as sentiment improves. These applications aim to recreate the traditional financial system, but replacing intermediaries like banks with smart contracts, decentralised protocols and assets.
The total value locked in DeFi rose 30% over July reaching 4.3 million ETH ($4 billion) by the start of August:
The top 4 DeFi protocols are shown below, which collectively hold more than $2 billion worth of assets:
With the rising popularity of DeFi, the returns of assets like LEND, BAND, SNX and KAVA outperformed bitcoin and large cap crypto-assets. The biggest gainer was YFI which appreciated more than +12,000%:
On-Chain Fundamentals
On-chain fundamentals for the top 5 crypto-assets are shown below. Over July, the number of active addresses and number of transfers fell slightly for BTC while the mean transaction fee and transfer value increased 260.23% and 26.69% respectively. Nevertheless, active addresses are above 1 million for Bitcoin — the highest level since June 2019.
Ethereum showed positive growth in the number of active addresses, the mean transaction fee and the number of transfers over July. Stablecoin usage, DeFi adoption and optimism around Eth2 are driving Ethereum’s on-chain fundamentals higher.
With the rise of DeFi, Ethereum has overtaken Bitcoin in terms of two on-chain fundamentals:
- the total daily settlement value in USD, and
- the total fee value in USD.
While many on-chain metrics have recovered from the drop on Black Thursday in March 2020, the transaction frequency on the Bitcoin blockchain (shown below) has yet to recover the high from March 2020.
The transaction frequency was around 3.80 per second on August 2nd and has fallen from a peak of 4.39 per second in June 2019. But the transaction intensity looks to be in an uptrend once again — suggesting the market is in a bullish cycle.
The 1-Year+ HODL Wave is at all-time highs for bitcoin — with the percentage of bitcoin’s ciurculating supply that has not moved in at least one year currently near 63%. The rising percentage suggests that HODLers have stronger conviction that bitcoin will serve as a store of value.
The Net Unrealised Profit/Loss (NUPL) indicator suggests that the bitcoin market is entering the Belief-Denial phase, with the value looking to move above 0.50 which could lead to another leg up.
Tops in the market are usually indicated once the NUPL is above 0.75 — which indicates the Euphoria-Greed stage of the cycle.
Read our full report ‘The Rise of DeFi — Crypto Market Report July 2020’ here: https://docsend.com/view/6c4kq8x56kf7sy2a
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