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Celsius says it tipped in 25,000 Ether to help launch Ethereum 2.0

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The highly anticipated launch of Ethereum 2.0, or Eth2, is scheduled to take place next week. Specifically speaking, Eth2’s proof-of-stake blockchain known as “the beacon chain” has been confirmed to run alongside the Ethereum network starting Dec. 1. 

Although some members of the blockchain community remained skeptical about a Dec. 1 launch date for the beacon chain, an impressive 524,288 Ether (ETH) from 16,384 validators has been deposited into the Eth2 contract. As such, there is now assurance from The Ethereum Foundation that Eth2’s beacon chain will indeed go live as expected.

While impressive, it’s important to note that additional deposits went into the Eth2 deposit contract even after the target goal was reached. To put this into perspective, Vitalik Buterin, the co-founder of Ethereum, sent a recent tweet on Nov. 24 showing the impressive amount of transaction across the Ethereum network over time:

While it’s unknown where these transactions came from, Alex Mashinsky, chief executive officer and founder of Celsius Network — a crypto lending and borrowing platform — told Cointelegraph that Celsius provided 25,000 worth of ETH to ensure that the Eth2 deposit contract had enough funds to launch on time. 

According to Mashinsky, the amount of ETH Celsisus deposited was equivalent to $15,125,000 at the time of the transaction. Mashinsky further noted that funds came from the Celsius ‘s pool of community assets, explaining that this will be used to generate an even higher yield for the community once the Eth2 network is officially launched. Currently, Celsius users can earn up to 7.21% Annual Percentage Yield on ETH held in the Celsius wallet. Mashinsky said:

“We already have 230 thousand users on the Celsius network, along with 3.3 billion dollars worth in assets. These users are putting in ETH, allowing the network to earn yield on it in many different ways. The 25,000 ETH contributed to the proof-of-stake Ethereum network will generate another source of yield for our community.”

Mashinsky further shared that the growing Celsius community has been modeled off Ethereum, noting the importance of giving back the Ethereum network:

“We built our CEL token on the Ethereum blockchain and used it to scale and become one of the fastest-growing companies in crypto. We are proud to inaugurate the ETH 2.0 Genesis and contribute the last building block with 25,000 ETH from the Celsius community and be a helping hand to a company that helped us scale our own project.”

Hopes are high for Eth 2.0, but concerns remain

Although the Eth2 beacon chain is set to launch on Dec. 1, concerns still remain. For example, while scalability issues are expected to be resolved as Ethereum adopts a proof-of-stake consensus algorithm, the security of some Ethereum smart contracts remains questionable. This has especially come to light with the rise of decentralized finance, or DeFi, projects.

As such, a new working group from the Enterprise Ethereum Alliance called “EthTrust Security Levels Working Group” has been focused on creating a set of defined standards to ensure Ethereum smart contracts are safe to use. The working group eventually hopes to develop a digital registry for secure smart contracts to be utilized by enterprises.

Additionally, some remain concerned that benefits will not be seen immediately following the gradual launch of Eth2. As such, the need for layer-two scaling solutions has become apparent.

Concerns aside, Mashinsky expressed excitement for faster scalability from the Eth2 network:

“Ethereum 2.0 will scale everything 100 times faster than now. The ability to move Ethereum from a proof-of-work to a proof-of-stake network will open a world of new ideas and opportunities that couldn’t be achieved before due to scalability issues.”



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3 reasons why Ethereum price is still on track to top $2,000

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After dropping 27% over three days, Ether (ETH) price finally reached a bottom at $1,040 on Jan. 22. 

The sharp correction liquidated $600 billion worth of future contracts but interestingly, Ether price rebounded to a new all-time high even as Bitcoin price continues to trade in a slight downtrend.

According to Cointelegraph, the increasing TVL and transaction volumes of the decentralized finance sector are behind Ether’s impressive surge.

ETH/USD 4-hour chart. Source: TradingView

To determine whether the recent pump reflects a potential local top, we’ll take a closer look at on-chain flows and derivatives data.

Exchange withdrawals point to whale accumulation

Increasing withdrawals from exchanges can be caused by multiple factors, including staking, yield farming, and buyers sending coins to cold storage. Usually, a steady flow of net deposits indicate a willingness to sell in the short-term. On the other hand, net withdrawals are generally related to periods of whale accumulation.

ETH held in exchange wallets. Source: Cryptoquant.com

As the above chart shows, on Jan. 23, centralized exchanges recently reached their lowest Ether reserve levels since November 2018.

Although there is some discussion whether part of this Ether exodus is an internal transfer between Bitfinex cold wallets, there has been a clear net withdrawal trend over the past month. Despite these ‘rumors’, the data points towards accumulation.

This data also coincides with the DeFi’s total value locked (TVL) reaching a $26 billion all-time high and signals investors chose to take advantage of the lucrative yield opportunities that exist outside of centralized exchanges.

Futures were overbought

By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.

The 3-month futures should usually trade with a 6% to 20% annualized premium (basis) versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as backwardation and indicates that the market is turning bearish.

On the other hand, a sustainable basis above 20% signals excessive leverage from buyers, creating the potential for massive liquidations and eventual market crashes.

March 2021 ETH futures premium. Source: NYDIG Digital Assets Data

The above chart shows that the premium peaked at 6.5% on Jan. 19, equal to a 38% annualized rate. This level is considered extremely overbought, as traders need an even higher price increase ahead of expiration to profit from it.

Overbought derivatives levels should be considered a yellow flag, although maintaining them for short periods is normal. Traders might momentarily exceed their regular leverage during the rally and later purchase the underlying asset (Ether) to adjust the risk.

One way or another, the market adjusted itself during the Ether price crash, and the futures premium currently stands at a healthy 4.5% level, or 28% annualized.

Spot volume remains strong and traders bought the dip

In addition to monitoring futures contracts, profitable traders also track volume in the spot market. Typically, low volumes indicate a lack of confidence. Therefore significant price increases should be accompanied by robust trading activity.

ETH aggregate spot exchanges volumes. Source: Coinalyze.net

Over the past week, Ether has averaged $6.1 billion in daily volume, and while this figure is far from the $12.3 billion all-time high seen on Jan. 11, it is still 240% higher than December’s. Therefore, the activity supporting the recent $1,477 all-time high is a positive indicator.

Exchange-provided data highlights traders’ long-to-short net positioning. By analyzing every client’s position on the spot, perpetual and futures contracts, one can obtain a clearer view of whether professional traders are leaning bullish or bearish.

With this said, there are occasional discrepancies in the methodologies between different exchanges so viewers should monitor changes instead of absolute figures.

Exchanges top traders ETH long-to-short ratio. Source: Bybt.com

The top traders index at Binance and Huobi have held roughly the same Ether position over the past couple of days. Huobi’s average over the past 30 days has averaged a 0.83 long-to-short ratio while at Binance traders held a 0.94 average. The current reading at 0.85 indicates a slight negative sentiment.

OKEx stands out as the top traders long-to-short ratio peaked at 2.0, strongly favoring longs in the early hours of Jan. 22, but it decreased until Jan. 24 and finally bottomed at 1.05. The strong net selling trend was reverted today as traders bought the dip and the indicator flipped to 1.17 in favor of longs.

One should keep in mind that arbitrage desks and market makers encompass a vast portion of the exchanges’ top traders metric. The unusually high futures premium would incentivize those clients to create short positions in futures contracts while simultaneously buying Ether spot positions.

Considering Ether’s on-chain data indicating whales hoarding, along with the healthy futures contracts premium, the market structure seems reliable.

The fact that top traders at OKEx also bought today’s dip is further indication that the rally should see continuation.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.