Research Summary
The report discusses the recent rally in Ethereum (ETH), attributing it to the fee switch at Uniswap rather than the prospects of an ETH spot ETF. It also highlights the performance of Bitcoin (BTC) and the inflows into BTC ETFs. The report further discusses the implications of Uniswap’s decision to direct some share of its fees to UNI holders.
Key Takeaways
Ethereum’s Recent Rally
- Ethereum’s Performance: The report notes that Ethereum has reached new multi-year highs, with its price rising by 4% to over $3100. This is the highest price since April 2022.
- Reason for the Rally: The report suggests that the rally is likely due to the fee switch at Uniswap, which was approved last week, rather than the prospects of an ETH spot ETF. Uniswap is the highest-volume decentralized exchange (DEX) in the crypto market, handling $8.7 billion of volume over the past week.
Uniswap’s Fee Switch
- Impact on UNI: The decision to turn on the fee switch has led to a 50% increase in the price of UNI over the past three days. This change allows UNI holders to take a share of the fee generation, making UNI an asset that investors can hold.
- Implications for the DeFi Sector: The report notes that the DeFi sector as a whole has tracked the UNI rally, with most of the sector up around 10-15%. SUSHI was the biggest beneficiary, with its price increasing by 25%.
Bitcoin’s Performance
- Bitcoin’s Price Action: The report notes that Bitcoin’s price action has calmed down, remaining essentially unchanged over the past week. The price action continues to reflect the inflows into BTC ETFs.
- Inflows into BTC ETFs: The report highlights that the week preceding the report saw outsized inflow into the BTC ETFs, north of $400 million per day. However, last week’s inflows were closer to around $200 million per day.
Actionable Insights
- Monitor Ethereum’s Performance: Given the recent rally in Ethereum, it would be prudent to closely monitor its performance and the factors driving it, particularly the impact of Uniswap’s fee switch.
- Assess the Impact of Uniswap’s Fee Switch: The decision to turn on the fee switch at Uniswap has significant implications for UNI holders and the DeFi sector as a whole. It would be beneficial to assess the long-term impact of this decision.
- Track Inflows into BTC ETFs: The report suggests that the price action of Bitcoin continues to reflect the inflows into BTC ETFs. Therefore, tracking these inflows could provide insights into Bitcoin’s future price movements.
