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

Bitcoin took a dive Wednesday. Ethereum miners are benefiting from all that DeFi.

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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. 

Alex 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.” 

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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. 

“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

Ether, 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). 

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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. 

While 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

Digital assets on the CoinDesk 20 are all in the red Wednesday. Notable losers as of 20:00 UTC (4:00 p.m. ET): 

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