Project development continues as token demand remains muted

Weekly Recap

Cryptoassets performed strongly for the second consecutive week, as prices have seemingly become less responsive to negative headlines surrounding the war in Ukraine and the risk of excess hawkishness from the Fed.

It was another “risk-on” week within crypto as smart contract platforms performed the best on a size-adjusted basis out of any other sector.

Much of this outperformance stems from the recent optimism surrounding Ethereum’s merge and the consequent increase in staked ETH. However, alternative layer 1 platforms such as LUNA, DOT, SOL, and AVAX, have had similarly bullish weeks.

Source: Messari

Last week, we discussed the implications of the latest testnet merge for Ethereum. We think that many ETH holders were waiting for more conclusive evidence suggesting that the merge was imminent. The completion of the Kiln Testnet merge was a likely catalyst for many to start to stake their ETH, thus reducing the liquidity of the ETH supply on exchanges.

Thus far, we have seen the highest monthly growth in new ETH staked since the launch of the Beacon Chain. Should the network maintain this level of momentum, we could see an intense squeeze on ETH supply at some point in 2022 as investors rush to stake their ETH.

Source: Fundstrat, Glassnode