Bitcoin
BTC$70 171.16

-1.77%

Ethereum
ETH$3 546.10

-1.56%

Tether
USDT$1.000248

0.01%

Binance Coin
BNB$616.36

5.02%

Solana
SOL$189.14

0.16%

XRP
XRP$0.636919

2.07%

ETH After the Merge: Fall Instead of Growth


19 Sep 2022

#Ethereum

We usually start our review with the main cryptocurrency, bitcoin. But this time, let's deviate from the rules and give the palm to the main altcoin, Ethereum. This is due to an event that may become the most important for the crypto industry in 2022. On September 15, the ETH network hosted the global update The Merge, which involves the transition of the altcoin from the Proof-of-Work protocol to Proof-of-Stake (PoS). This means that now the security of the blockchain will be ensured not by miners, but by validators: users who have deposited and blocked their share of coins (staking).

Now, instead of running large networks of computers, validators will use their Ethereum cache as a means of validating transactions and mining new tokens. This should improve the speed and efficiency of the network so that it can process more transactions and solve the problem of user growth. The developers claim that the update will make the network that hosts the ecosystem of cryptocurrency exchanges, lending companies, non-playable token (NFT) markets and other applications more secure and scalable. In addition, cryptocurrencies have been constantly criticized for their huge energy consumption. Ethereum will now consume 99.9% less of it.

Enthusiasts believe that this merge will revolutionize the industry and allow Ethereum to overtake bitcoin in capitalization and value. However, many authoritative voices sound much calmer. For example, Bank of America (BofA) believes that this hard fork will not solve the problem of scalability or high fees but may lead to wider institutional adoption. The notable decrease in power consumption after The Merge will allow some investors to purchase this altcoin for the first time. “The ability to place ETH and generate higher quality returns (lower credit and liquidity risk) as a validator or through staking could also drive institutional adoption,” BofA admitted.

CoinShares Chief Strategy Officer Meltem Demirors looks more pessimistic. He believes that investors are ignoring the overall market situation in the hype around the Merge. And it’s not certain that this event will attract significant investment capital: “The reality is more prosaic,” says the CoinShares strategist. “At the global level, investors are concerned about rates and macro indicators. And I don't believe that significant amounts of new capital are likely to enter ETH.”

Time will tell how the market will eventually react to the Merge. In the meantime, instead of growth, there has been a fall. The trigger was the collapse of stock indices (S&P500, Dow Jones and Nasdaq), which was provoked by US inflation data for August. Market participants decided that in such a situation the Fed would tighten its monetary policy more actively and raise interest rates. It is expected that the rate will rise by another 0.75% or even 1.0% next week. As a result, the dollar began to rise sharply, while risky assets, including bitcoin and Ethereum, fell. BTC fell to $19,341 by Friday evening, having lost 15% of its value over the week, ETH fell to $1,403, “shrinking” by 20%.

According to many experts, due to the hawkish position of the Fed and the ECB, the dynamics of the crypto market will remain negative at least until the end of the year. Against the backdrop of a reduction in market risk appetite, it will be difficult for bitcoin to stay above not only the psychologically important level of $20,000, but also above the June 18 low of $17,600. The latter threatens a further collapse.

A trader and analyst under the nickname filbfilb allowed in an interview with Cointelegraph the bitcoin to fall from current levels to $10,000-11,000. According to the specialist, bitcoin has become highly correlated with the US stock market, which is under enormous pressure due to the Fed's policies. The first cryptocurrency behaves as a risky asset, not as inflation insurance.

The expert noted that the upcoming winter will be a serious test for residents and politicians of the European Union, the consequences of which will have a negative impact on hodlers. The important thing will be how the countries of the Old World will cope with the energy crisis. According to him, everything is in the hands of diplomats who are able to prevent an emergency. Otherwise, risky assets will face a difficult future.

It should be noted here that the dependence of BTC on the US stock market weakened sharply in August and was at the annual low. However, it has begun to grow again and, according to the TradingView service, the correlation between bitcoin and the S&P 500 index has reached 0.59. The situation is similar with the Nasdaq. The correlation with it fell to 0.31 in August, and it rose to 0.62 in September. Analysts remind that the dependence of the crypto sphere on the stock market becomes strong after the correlation index rises above 0.5. When 0.7 is reached, the dependence becomes ideal.

However, despite the negative sentiments, there is still hope to see light at the end of the tunnel. The aforementioned filbfilb called bitcoin's Q1 2023 rally "obvious". The expert sees two reasons for this. The first is the seasonal factor. Downtrends end 1000 days after the halving (which will be early next year. The second is a change in sentiments to positive ones, based on game theory. With a probability of 2/3, the expert suggested that Europe will survive the coming winter.

Cryptocurrency analyst with the nickname Rager does not believe in the decline of BTC to $12,000. He agreed that there are no guarantees when dealing with bitcoin. But, in his opinion, it is very likely that the asset is forming a bear market bottom above $19,000. Another analyst and trader with the nickname Rekt Capital believes that everything is moving towards the final phase of bitcoin's decline. “A significant part of the BTC bear market is behind us, and the entire bull market is ahead. The bottom of the bear market will be in November, December or the beginning of the Q1 2023.”

Rekt Capital noted that the data signal a possible rise in BTC by 200%, but there is one caveat: Bitcoin could fall even more before it goes up. “Of course, in the short term, the BTC price could fall by 5%-10%,” Rekt Capital writes. “But in the long term, a rally of more than 200% is very likely.” Despite the depreciation of BTC, Michael Saylor, the founder of MicroStrategy, hopes for the best. His company intends to proceed with the acquisition of this asset. It will reportedly sell $500 million worth of its own shares. The proceeds from these sales will be used, among other things, to replenish the cryptocurrency stocks. Note that MicroStrategy is the largest corporate bitcoin holder. It owns 129,699 coins purchased at an average exchange rate of $30,664. The last purchase (480 BTC) was made in June.

 At the time of writing (Friday evening, September 16), this MicroStrategy investment is deeply unprofitable, as BTC/USD is trading at $19,730 (ETH/USD - $1,435). The total capitalization of the crypto market has again fallen below the psychologically important level of $1 trillion and is $0.959 trillion ($1.042 trillion a week ago). The Crypto Fear & Greed Index fell 2 points in seven days from 22 to 20 and is still in the Extreme Fear zone.


Related

Crypto may be ready for a new leg down
Crypto may be ready for a new leg down
Cryptocurrencies wait for a signal
Cryptocurrencies wait for a signal
What are dynamic NFTs?: Use cases and examples
What are dynamic NFTs?: Use cases and examples
Shanghai Upgrade Fires Up ETH and Altcoins
Shanghai Upgrade Fires Up ETH and Altcoins
Challenges of data accessibility in the NFT market
Challenges of data accessibility in the NFT market
Is the A.I. revolution about to pump Nvidia stocks?
Is the A.I. revolution about to pump Nvidia stocks?
Five tips for investing during a global recession
Five tips for investing during a global recession
What is NFT ticketing and how does it work?
What is NFT ticketing and how does it work?
The crypto market is cheaper than a trillion again
The crypto market is cheaper than a trillion again

Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 76% 42 $70 171.16 -1.77% 11.72% $1 380 088 680 972 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 71.2% 50 $3 546.10 -1.56% 7.59% $425 782 312 228 ETH 7 days price change
3 Tether (USDT) USDT Tether predictions 94% 1 $1.000248 0.01% 0.04% $104 530 236 404 USDT 7 days price change
4 Binance Coin (BNB) BNB Binance Coin predictions 60% 80 $616.36 5.02% 13.18% $92 168 846 968 BNB 7 days price change
5 Solana (SOL) SOL Solana predictions 58.8% 88 $189.14 0.16% 12.08% $84 055 265 074 SOL 7 days price change
6 XRP (XRP) XRP XRP predictions 81.2% 28 $0.636919 2.07% 5.16% $34 956 800 668 XRP 7 days price change
7 USD Coin (USDC) USDC USD Coin predictions 94% 2 $1.000145 0.01% 0.02% $32 526 874 714 USDC 7 days price change
8 Dogecoin (DOGE) DOGE Dogecoin predictions 67.2% 66 $0.215397 -1.69% 47.30% $30 945 208 500 DOGE 7 days price change
9 Cardano (ADA) ADA Cardano predictions 65.2% 66 $0.665318 1.36% 9.67% $23 674 997 116 ADA 7 days price change
10 Avalanche (AVAX) AVAX Avalanche predictions 61.2% 87 $53.96 -1.54% 1.41% $20 367 154 316 AVAX 7 days price change
11 SHIBA INU (SHIB) SHIB SHIBA INU predictions 58.8% 94 $0.000031 -3.69% 18.78% $18 204 426 308 SHIB 7 days price change
12 Toncoin (TON) TON Toncoin predictions 58% 86 $5.13 1.21% 22.84% $17 789 214 110 TON 7 days price change
13 Polkadot (DOT) DOT Polkadot predictions 75.6% 49 $9.75 1.79% 10.88% $13 922 325 263 DOT 7 days price change
14 Bitcoin Cash (BCH) BCH Bitcoin Cash predictions 72.8% 57 $614.40 8.07% 54.65% $12 093 090 262 BCH 7 days price change
15 Chainlink (LINK) LINK Chainlink predictions 75.2% 42 $19.21 -0.90% 10.53% $11 280 482 429 LINK 7 days price change

Be the first to receive Cryptocurrency Price Predictions and Forecasts daily

Get cryptocurrency price predictions, forecasts with analysis and news right to your inbox.

© 2015-2024 Crypto-Rating.com

The usage of this website constitutes acceptance of the following legal information. Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website, including information about the cryptocurrencies and bitcoin is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Crypto Rating shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about cryptocurrencies. The entire responsibility for the contents rests with the authors. Reprint of the materials is available only with the permission of the editorial staff.