Market Wrap: Bitcoin Falls to $11.1K; Ethereum Miners at Record Fee Percentage

Sep 2, 2020 8:24PM | Cryptocurrencies

Bitcoin took a dive Wednesday. Ethereum miners are benefiting from all that DeFi.
Bitcoin (BTC) trading around $11,396 as of 20:00 UTC (4 p.m. ET). Slipping 4.8% over the previous 24 hours.Bitcoin’s 24-hour range: $11,159-$12,058BTC above its 10-day moving average but below the 50-day, a sideways signal for market technicians.Bitcoin trading on Coinbase since August 31.Source: TradingViewRead More: Bitcoin Price Drops 4% After Latest Rejection at $12K Resistance
Bitcoin dropped to as low as $11,159 on spot exchanges like Coinbase Wednesday. The fall was exacerbated by long-oriented derivatives traders on exchanges like BitMEX. That platform experienced $9 million in sell liquidations in one hour as prices fell, the equivalent of a margin call in the cryptocurrency world. 
Liquidations on BitMEX the past three days.Source: SkewAlex Mascioli, head of institutional services at crypto brokerage Bequant, said long traders were convinced bitcoin’s price would surpass 2020 highs but instead were wiped out. “Bitcoin still needs to break above its previous high at $12,400 to have enough serious momentum to have a chance of retesting previous highs,” he said. 
There is a chance that next time bitcoin hits that price level it could head into higher territory, approaching 2020 highs around $12,475, Mascioli added. “For now, $12,400 is the most important resistance level the bulls must take out. The technicals appear as if the bulls may retest this level in the next week.” 
Read More: Total Value on Bitcoin’s Lightning Network Sets Another Record High 
Meanwhile, the rise of decentralized finance, or DeFi, gives hardcore bitcoin holders an opportunity to profit even when price moves are bearish on days like Wednesday. 
“The DeFi market is giving long-term bitcoin holders a chance to increase their yields and return,” said Zachary Friedman, chief operating officer for Global Digital Assets.
However, some traders aren’t convinced DeFi can maintain its status quo, and that is reflected in bets on the options market for ether (ETH). Based on probabilities, options traders have 66% confidence ether will be over $400 by September 20 maturity, but that number drops to 48% by December 20 maturity. 
Ether price probabilities based on the options market.Source: Skew“I have a sneaky feeling that ETH options are going to be in play given the amplifying uncertainty brought about by variables such as yETH and the punitive gas fees,” said Vishal Shah, an options trader and founder of derivatives exchange Alpha5. yETH is a product from Yearn.Finance that allows ether holders to deposit the crypto and gain yield by leveraging various other DeFI projects. 
Read More: Open Positions in Deribit’s Ether Options Hit Record High Above $500M
Ethereum mining hits record fee percentageEther, the second-largest cryptocurrency by market capitalization, was down Wednesday, trading around $436 and slipping 8.5% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 
Read More: Uniswap Topples Coinbase in Trading Volume
The percentage of revenue Ethereum miners receive from fees has hit an all-time high. It crossed the 70% threshold Tuesday as DeFi projects that run on the network are pushing gas prices, the unit of account for transactions and smart contract interactions, to fresh highs. 
All-time Ethereum miner revenue by fee percentage.Source: GlassnodeWhile fees are a problem, many stakeholders say this cost inherent to Ethereum is a better price to pay than in the traditional financial world. “The DeFi market removes one crucial intermediary – the bank,” said Global Digital Asset’s Friedman. “With fewer parties taking a cut, and much more transparency, as well as a collateralized lending system ensuring high levels of security, all the benefits of lending can fall onto the lender and thus remove the majority of costs,” he said.
Read More: Yearn.Finance’s New Vault Leverages DeFi ETH, MakerDAO and Curve
Other marketsDigital assets on the CoinDesk 20 are all in the red Wednesday. Notable losers as of 20:00 UTC (4:00 p.m. ET): 
0x (ZRX) – 10.4%zcash (ZEC) – 10.3%eos (EOS) – 10.2%Read More: Police Reportedly Raid Headquarters of South Korea’s Largest Exchange
Read More: Senate Banking Chairman Asks OCC About Its Planned Crypto Rulemaking
Oil is down 3.4%. Price per barrel of West Texas Intermediate crude: $41.53.Gold was in the red 1.3% and at $1,942 as of press time.Read More: Newly Discovered Malware Has Arsenal of Tricks to Help It Steal Crypto
U.S. Treasury bond yields slipped Wednesday. Yields, which move in the opposite direction as price, were down most on the 30-year, in the red 3.1%.Read More: Ethereum Classic Labs Airs New Plan to Stop Future 51% Attacks
The CoinDesk 20: The Assets That Matter Most to the MarketDisclosureThe leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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