ETH on Fire, Call Buyers Don't Tire, and NFTs Push Higher

AUG 09, 2021 • 4 Min Read

Ashwath Balakrishnan

Disclosure: Delphi Ventures and members of our team may own positions in assets mentioned in this report. This statement is intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token. This content is for informational purposes only and you should not make decisions based solely on it. This is not investment advice.

Metus vulputate eu scelerisque felis. Nulla facilisi cras fermentum odio eu. Scelerisque fermentum dui

faucibus in ornare quam viverra orci sagittis. A iaculis at erat pellentesque adipiscing commodo elit. In

fermentum et sollicitudin ac orci. Ultrices sagittis orci a scelerisque purus. Faucibus ornare

suspendisse sed nisi lacus sed viverra tellus in. Mauris cursus mattis molestie a iaculis at erat

pellentesque adipiscing. Volutpat diam ut venenatis tellus in metus vulputate. Eu consequat ac felis

donec et odio pellentesque. Eu mi bibendum neque egestas congue quisque egestas diam. Quam

lacus suspendisse faucibus interdum posuere lorem. Quam id leo in vitae. Ut faucibus pulvinar

elementum integer enim neque. Id ornare arcu odio ut sem nulla pharetra diam sit. Molestie ac feugiat

sed lectus vestibulum mattis. Ipsum nunc aliquet bibendum enim facilisis. Euismod nisi porta lorem

mollis aliquam ut porttitor.

Iaculis nunc sed augue lacus viverra vitae congue eu consequat. Gravida neque convallis a cras.

Nunc scelerisque viverra mauris in aliquam sem. Non odio euismod lacinia at quis risus sed vulputate

odio. Purus faucibus ornare suspendisse sed. Turpis egestas maecenas pharetra convallis posuere

morbi. Nec feugiat nisl pretium fusce id velit ut. Nunc congue nisi vitae suscipit tellus mauris a diam.

Posuere sollicitudin aliquam ultrices sagittis orci. Urna nec tincidunt praesent semper. Turpis nunc

eget lorem dolor sed viverra.

suspendisse sed nisi lacus sed viverra tellus in. Mauris cursus mattis molestie a iaculis at erat

pellentesque adipiscing. Volutpat diam ut venenatis tellus in metus vulputate. Eu consequat ac felis

donec et odio pellentesque. Eu mi bibendum neque egestas congue quisque egestas diam. Quam

lacus suspendisse faucibus interdum posuere lorem. Quam id leo in vitae. Ut faucibus pulvinar

elementum integer enim neque. Id ornare arcu odio ut sem nulla pharetra diam sit. Molestie ac feugiat

sed lectus vestibulum mattis. Ipsum nunc aliquet bibendum enim facilisis. Euismod nisi porta lorem

mollis aliquam ut porttitor.

Iaculis nunc sed augue lacus viverra vitae congue eu consequat. Gravida neque convallis a cras.

Nunc scelerisque viverra mauris in aliquam sem. Non odio euismod lacinia at quis risus sed vulputate

odio. Purus faucibus ornare suspendisse sed. Turpis egestas maecenas pharetra convallis posuere

morbi. Nec feugiat nisl pretium fusce id velit ut. Nunc congue nisi vitae suscipit tellus mauris a diam.

Posuere sollicitudin aliquam ultrices sagittis orci. Urna nec tincidunt praesent semper. Turpis nunc

eget lorem dolor sed viverra.

lacus suspendisse faucibus interdum posuere lorem. Quam id leo in vitae. Ut faucibus pulvinar

elementum integer enim neque. Id ornare arcu odio ut sem nulla pharetra diam sit. Molestie ac feugiat

sed lectus vestibulum mattis. Ipsum nunc aliquet bibendum enim facilisis. Euismod nisi porta lorem

mollis aliquam ut porttitor.

Market Update

It’s a great day to be a crypto bull. BTC and ETH were pushed down during the Asian session but both coins (and the rest of the market) caught a strong bid in the European session. ETH is just under its weekend high while BTC made a new high on the daily chart. Sentiment is so bullish even ICP is in the green today.

$53 Million of ETH Burned

  • EIP-1559 is living up to expectations as a potential deflationary force for ETH supply. Since the London Hard Fork (when the EIP was implemented) on Aug. 5, over 17,000 ETH, or $53 million as of the time of writing, have been burned. Before the EIP was implemented, miners would’ve pocketed all of that ETH as revenue for their services. However, with the new burn in place, miners earned just over 250 ETH in the same span of time. The average ratio of ETH burned to ETH sent to miners is currently 1:0.015 (or 1.5%).
  • Ethereum miners made a killing over the last year as network usage and the median fee soared. With EIP-1559, miners are no longer the sole beneficiaries of rising Ethereum usage — token holders now reap economic incentives via the burn mechanism. It’s worth noting that mining Ethereum is still profitable, and the network’s hash rate continues to rise.

Near-Term Bullish Sentiment

  • There’s been a spike in demand for near-term options as BTC and ETH obliterated their multi-month price ranges. Both assets seem to be in a strong uptrend, and speculators have been buying short-term options to capitalize on this.
  • Implied volatility for short-term contracts have rocketed throughout this move, with ETH and BTC 1 week contracts now sitting at an IV of 115% and 95% respectively. Implied volatility has run up faster than realized volatility, which means the options market is starting to price in more volatility.
  • So while market participants are turning bullish, there’s still risk of a short-term drawdown as implied by options being priced with more volatility.

  • To further expand on this view, the 25 delta skew remains close to 0 for the same group of ETH and BTC options contracts (1 week duration). As the skew drifts down, it means there’s more demand for calls than puts and vice versa.
  • With the skew hardly budging over the last week, this is an indication that market participants are still biased towards calls and aren’t apeing into puts (for insurance) just about yet. With rising implied vol and virtually no demand for puts, sentiment in the short-term is almost overwhelmingly bullish, which means a pullback could very well be in the cards.

NFTs Refuse to Slow Down

  • July was the month of NFTs. Marketplaces hit all-time volumes, new projects attracted millions in capital — even older projects started to show signs of life as people turned their attention to the NFT space.
  • Interestingly, the projects that were set up just before the NFT mania kicked in were set up perfectly to capitalize on this rush. Bored Apes, Meebits, and Veefriends fall into this category while ArtBlocks just blew up out of nowhere. Not pictured in this chart is CoolCats, which is up 4500% (45x) over the same time frame.

Notable Tweets

Circle wants to become a digital currency commercial bank.

Welcome to the Superverse.

Poloniex settles with SEC; sets precedent for DEXes?

Create a free account to continue reading

Go Pro at 40% off

Immediately access the entire catalog of research for Delphi, Office Hours & private Discord