Crypto Market Roundup May 28: DeFi Resurgence Begins After Dip

Jeremy Koven
5 min readMay 28, 2021

May 28, 2021

So, it seems like the crypto market is reviving slowly and steadily. Today, let’s shift our focus to Ethereum, beginning with the DeFi ecosystem.

Around May 12, the total value locked up in DeFi rose to $90 billion and crashed to $50 billion on May 24 in the middle of the market crash. Since then, it has improved to $62 billion.

Has DeFi Survived Its Worst Test?

Between the beginning of 2020 and May 12, 2021, the DeFi market has jumped from $700 million to $90 billion. For those doing the math, that’s a mind boggling 12,750% rise in TVL. While all this is definitely great, there was a lingering question in the back of everyone’s mind.

Alright, DeFi rose spectacularly during the bull market — so did a gazillion other shitcoins. However, do they have what it takes to be resilient in a market crash?

Short answer — Yes.

Despite facing the worst crash since its inception, DeFi TVL still managed to stay above $50B! That’s truly staggering.

Now, why is this a good sign for Ethereum? The lion’s share of the DeFi apps is built on top of Ethereum. With DeFi providing itself to be a healthy ecosystem that can sustain itself under real-world stress testing, it bodes very well for Ethereum’s future. In fact, prominent billionaire investor, Carl Icahn, said in a recent interview that he prefers Ethereum over Bitcoin because ETH can be both a mode of payment and a store-of-value.

So, what about the on-chain data? Is that looking good for Ethereum? Let’s take a look.

Ethereum Network Growing And As Sentiment Turns Positive

The size of the overall Ethereum network dipped considerably between May 21 and May 23, as the number of nodes decreased from 117,500 to 92,840. However, the network has steadily grown since then, which is a very positive sign.

Now, check out this chart. This is Glassnode’s most popular chart — the SOPR or the Spent Output Profit Ratio. The SOPR is computed by dividing the realized value (in USD) divided by the value at creation (USD) of a spent output. So, if SOPR > 1, it tells us that most of the addresses are in profit.

Now, if you see the SOPR chart, you can see that it pretty much follows the network growth chart. From May 21 to May 23, the SOPR fell below 1 (aka the horizontal black line), indicating that the majority of the Ethereum addresses were operating at a loss. Since then, the SOPR has started to pick up and trend above 1, showing that the addresses are back in profit again.

Why did this happen? Well, check out the Ethereum price chart.

Well, well, well… Coincidence? I think not!

Now, we can make our hypothesis:

  1. Between May 21 and May 23, as the Ethereum price dropped, the number of addresses in profit dropped as well.
  2. As ETH reached a bottom, more people started entering the market to swoop in as many ethers as possible. This caused the price to go up, and the SOPR rose above 1 as well.

Looking At Some More Interesting Metrics

According to CryptoQuant, the number of ETH tokens held in Exchange wallets has been pretty much consistent throughout the week. However, there are some noticeable inflow spikes as per the chart on the right.

Wait, that’s odd. Despite a couple of spikes in the inflow, the balance in the exchanges has remained relatively stable. Let’s take a closer look.

There is a massive spike on May 25 in the exchange inflow metric.

However, in the outflow metric, there is a major spike on May 25, as well.

So, it seems like there was a significant inflow and outflow of tokens at the same time. A huge buy-in followed a considerable sell-off.

Finally, let’s look at how the whales have been acting. This chart shows the number of ETH tokens held by the top non-exchange wallets. It seems like these addresses sold off their tokens till May 23 and then started to accumulate once again.

As such, it looks like the whales have followed the market sentiment and price action to make the most of the situation.

In Closing

So, DeFi stayed strong despite its harshest test yet. Following the price dip, it looks like things are looking up for Ethereum. Let’s wait till next week and see if my bullish hypothesis holds.

Oh, and before I go, do you like Bitcoin? Do you like free Bitcoin? I sure do.

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Jeremy Koven

Jeremy Koven, co-founder and COO of CoinSmart, has spent the last 12 years running successful internet companies from the ground up.