The crypto market has seen a flurry of activity over the past few days, and Ethereum was no exception; most of the conversation centered around inflation and the Merge event. At long last, it seems that calmness has prevailed on the market, and everyone is waiting for ETH to reach the crucially important level of $2000.
The Daily Chart
Ethereum has recorded an astonishing 16% gain in the past two days as it touched a high of $1930 at the time of this writing. The second largest cryptocurrency has ascended above the $1,700-$1,800 range (in blue). Reclaiming this resistance has increased the bullish sentiment in the market. It appears that the success of the Goerli merge has been a positive catalyst over the past 24 hours.
If the bulls can flip the resistance at $2000, then the way is paved to reach the resistance zone in the range of $2200-2300(in red), which overlaps with the 200-day moving average line (in white). It should be noted that the price may experience a brief pullback to retest $1,800 before reaching higher levels.
However, if the bears push the price below $1,700 by creating a bull trap, the above bullish scenario is invalidated. In this case, a downward trend will be triggered.
Currently, the advantage is in favor of the bulls, and the positive mark remains strong until a lower high and low is formed.
Key Support Levels: $1500 & $1350
Key Resistance Levels: $1800 & $2160
Daily Moving Averages:
The ETH/BTC Chart
Against Bitcoin, ETH has hit the resistance zone in the range of 0.077-0.078 BTC (in red). There is still no sign of a trend reversal in the chart. A bullish structure has been formed that has easily broken all resistances. Therefore, if the bulls take a break here, the pair will find support at 0.0726 BTC (in green). A break and a close below this level confirm the trend reversal.
On the other hand, if the red resistance is broken, the price will expand to the critical resistance at 0.0884 BTC (in yellow), which was the highest level that the ETH price against BTC saw in the 2021 bull run.
Key Support Levels: 0.072 & 0.065 BTC
Key Resistance Levels: 0.078 & 0.088 BTC
Exchange Inflow/Outflow (Mean, MA7)
Definition: The seven days moving average of mean coins inflow/outflow to and from the exchange.
A high value indicates that investors who deposited or withdrew large amounts are increasing recently.
After Ethereum bottomed out at $880, the deposit of coins to the exchange decreased sharply. This could be due to positive news surrounding the Merge event. Meanwhile, the withdrawal of coins from the exchange did not reduce significantly. This indicates that buyers have dominated the exchanges. As long as this situation continues, the price is expected to touch higher levels.
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Proponents of the Ethereum fork are gearing up to eliminate the pivotal EIP-1559. An Ethereum miner, which gained allies from many prominent figures and firms in the industry, has now published an open letter to the community.
The Twitter account of the proposed chain-split fork – EthereumPoW – said that the once “almighty” Ethereum Foundation has abandoned “decentralization” as part of its missions as the transition towards proof-of-stake (PoS) neared.
In a long thread, the Ethereum fork supporters said EIP-1559 was an attempt by the Ethereum Foundation to build a bullish narrative at the expense of the miners. They also accused the “elites” of suppressing the voice of miners, who instead are a “political force” that “should wield some political power and influence” to maintain and inclusive political system. They also accused the “TEF and its friends” of coercing miners into cooperating at ease.
Claiming to be a “truly decentralized community of volunteers,” EthereumPoW vouched that the new token will not be pre-mined and there will be no inflation. Maintaining PoW and the Nakamoto Consensus mechanism will remain the focus of the group.
“Abolition of EIP-1559. In a truly open and inclusive system/society, there is no justification for punishing one group of participants in favor of another. We will never idolize leaders, unlike our predecessors. We strive to be an enlightened society.”
It also said that it aspires to eventually become completely autonomous and self-sustained, devoid of any entity governing the blockchain. It plans to achieve this in the next three years.
The idea was first started by a prominent Chinese miner Chandler Guo who had recently mentioned in an interview with Bloomberg that many Ethereum mining manufacturing companies reached out to him to start forking efforts. It soon gained traction after controversial Tron Founder Justin Sun threw his weight behind the proposition of a hard fork.
While Guo may be leading the charge, the suggested fork also garnered support from derivatives platform, BitMEX, which rolled out a futures contract enabling speculators to leverage trade ETHPOW.
Advocating Ethereum PoS
Stablecoin provider Circle has joined the growing list of platforms that have announced full support for Ethereum’s shift to a POS chain.
Its rival Tether also extended its support to service Ethereum’s new chain upon launch. Chainlink, however, confirmed that it will not support Ethereum forks after the Merge that is slated for September 19th.
The declining CPI numbers brought some positivity back to the crypto markets, as bitcoin spiked to almost $25,000.
The altcoins followed suit, and many, such as ETH, marked multi-month highs of their own. The crypto market cap is up by $70 billion in a day.
Bitcoin Neared $25K
After the relatively calm weekend, which bitcoin spent primarily around the $23,000 mark, the asset went on the offensive on Monday and jumped to the north of $24,000.
However, the bears came back to town almost immediately and didn’t allow any further increases. Just the opposite, BTC started retracing and dropped down to $22,700.
As anticipation was building up about the upcoming US CPI numbers for July, expected to be lower than the previous month, bitcoin reclaimed some ground and returned to $23,000.
The US indeed announced a lower inflation percentage of 8.5%, which was even less than the predicted one of 8.7%. Being a riskier asset, bitcoin reacted with an immediate price surge to $24,000.
More volatility came a bit later, and BTC jumped to just under $25,000, which became its highest price tag in almost two months. As of now, though, the cryptocurrency trades over $1,000 lower, but its market cap is still well above $450 billion.
ETH Leads the Alts’ Rally
As it typically happens in cases of enhanced volatility, the alternative coins follow suit and even mark even more impressive price fluctuations.
Ethereum, for example, stood around $1,700 but soared by over $200. As a result, it tapped a multi-month high of its own at $1,920 (on Bitstamp). Despite retracing slightly since then, the second-largest crypto is still over 10% up on the day.
Solana is another double-digit gainer, and SOL has touched $45. Impressive price increases also come from Cardano, Polkadot, Avalanche, and MATIC.
BNB, Ripple, Dogecoin, and Shiba Inu are also in the green, although with more modest gains.
Most lower- and mid-cap alternative coins have charted notable increases as well. This means that the cumulative market cap of all crypto assets has added over $70 billion in a day and stands above $1.150 trillion.
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The timing of the Merge has been the bone of contention for the Ethereum ecosystem. Developers expect it around September 19, even as the timeline is not concrete. But, with the details before the final testing phase of the event revealed, derivative trades have flipped bullish.
CoinShares Head of Research James Butterfill, for one, believes there has been a change in investor sentiment. In the latest edition of Digital Asset Fund Flows Weekly Report, the exec credited the “turn-around” in investor sentiment to “greater clarity” on the timing of the Merge.
The report highlighted that institutional investors are stacking up their bets on investment products based on Ethereum. In fact, they witnessed inflows totaling $16 million leading to a seven consecutive week run of inflows totaling $159 million.
Institutions are pouring in the capital as sentiment around the world’s second-largest crypto asset sees a positive reversal which could spur further buying behavior.
The report stated,
“Ethereum saw inflows totaling US$16m and is enjoying a near 7 consecutive week run of inflows totaling US$159m. We believe this turn-around in investor sentiment is due to greater clarity on the timing of The Merge where Ethereum shifts from proof-of-work to proof-of-stake.”
Ethereum Merge is Coming
The Merge aims to eliminate the energy-intensive mining process while simultaneously securing the Ethereum network with the help of staked ETH. After months of delays, the Ethereum mainnet will merge with the Ethereum 2.0 Beacon Chain to finally complete the transition from Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS).
The Ethereum 2.0 will have enhanced network efficiency, and security, in addition to drastically reducing carbon footprint by reducing energy consumption by over 99%, something that its predecessor was heavily criticized for.
Ethereum proponents have some reason to celebrate, but the ride has not been an easy one. From changing roadmaps, confusing terminology, and the latest being opposition to the transition itself, the community has seen it all. Its founder, Vitalik Buterin has been vehemently calling out any potential hard fork paving the way for another blockchain with a PoW mechanism.
But many influential figures in the space appear to support a hard fork. Tron founder, Justin Sun earlier revealed that his exchange Poloniex would list both ETHw and ETHs tokens. BitMEX also joined the list of growing supporters after it announced launching margin trading options in case of an ETHPoW fork.
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According to the multinational investment bank – JPMorgan Chase & Co. – the main reason for the recent recovery of the cryptocurrency market is the expectation that Ethereum will complete its shift from Proof-of-Work to Proof-of-Stake this year.
Bitcoin is currently up by over 35% compared to its lowest level in June, while Ether has soared by 95%. The total market capitalization back then was around $880 billion, while at the moment of this writing, it’s north of $1.16 trillion.
The Merge Is the ‘Real Driver’
Analysts at JPMorgan believe that the breath of fresh air in the crypto industry has been fueled by two reasons. First, the sector managed to restrict the contagion of failing projects like Terra. In May, the algorithmic stablecoin of the protocol – UST – depegged and slipped way below the target of $1.
The panic caused many investors to sell their UST reserves while Terra’s team started minting more LUNA (the other native token of the project) to cease the freefall. This, however, increased the supply, and the latter’s valuation crashed, too.
The second factor which created some kind of stability in the industry is Ethereum’s Merge, which should occur later in 2022. The analysts think the latest developments around the process have brought back investors’ confidence. The possible transition toward PoS has also created a “floor bottom” for the digital asset prices, while the experts believe the worst of the bear market is over.
“However, we think the real driver has been the Ethereum Merge and positive data following the launch of the Sapolia testnet in early July and Ropsten testnet in June, indicating the merge is viable in 2022.”
At the end of July, Vitalik Buterin – Co-Founder of Ethereum – assured that the Merge testing is 90% complete. Once the shift comes to an end, the blockchain protocol “will be able to process 100,000 transactions per second” compared to the current 15-20, he outlined.
The Merge Could be a Double-Edged Sword
While numerous experts point out the positive outcomes of Ethereum’s shift towards PoS, Mark Cuban warned it could have its downsides. For one, the process could turn out to be a “buy the rumor, sell the news” event, meaning that ETH’s price would go up prior to the Merge prompted by the investors’ enthusiasm, but eventually, it would halt the uptrend and even collapse.
It is worth noting that the move has been delayed numerous times in the past, and it is yet to be seen whether it will actually occur by the end of this year. Assuming it does, it will be the first cryptocurrency protocol to change its consensus algorithm. As such, it can’t be compared to similar past events, meaning that time will show what the aftermath will be.
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Ethereum has spent the last four weeks on a bullish footing as the buyers managed to shoot the price up from around $1,000. The bears were waiting around the overhead resistance at $1,800. They have prevented further price increases twice thus far, so is it time for the bulls to rest?
The Daily Chart
Yesterday, the bulls managed to briefly push the price above $1,800, but that’s where bears interfered. As a result, the cryptocurrency has fallen 6% as of this writing. The Moving Average Convergence Divergence (MACD) has shown negative divergence for some time, which is not good. Resuming the uptrend requires a break and close above the resistance zone at $1700-$1800 (in red).
On the other hand, if the bulls cannot clear this hurdle the bearish momentum may prompt the cryptocurrency to reach $1,500. A break below this level suggests that the bullish momentum has weakened. In this scenario, retesting the support zone in the range of $1,280-1,350 (in green) will look more likely.
Key Support Levels: $1500 & $1350
Key Resistance Levels: $1800 & $2160
Daily Moving Averages:
The ETH/BTC Chart
The bullish momentum against BTC seems to be waning. The divergence in the MACD indicator is clear. Bulls probably need to rest after breaking several firm resistances and reaching the descending line resistance (in yellow). The positive structure would remain strong as long as the bulls hold prices above 0.065 BTC (in green). If the horizontal support at 0.07 BTC (in white) cracks, the downtrend will likely be triggered. A close below 0.065 BTC signals the formation of a bearish structure.
Key Support Levels: 0.07 & 0.065 BTC
Key Resistance Levels: 0.075 & 0.08 BTC
Taker Buy Sell Ratio
Definition: The ratio of buy volume divided by sell volume of takers in perpetual swap trades.
Values over 1 indicate bullish sentiment is dominant.
Values under 1 indicate bearish sentiment is dominant.
According to CryptoQuant data, takers fill more sell orders in the derivatives market. This makes the bearish sentiment prevail for the time being. This metric ideally must stay below 1 (light blue line), so it’s important to remain very cautious.
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The CEO of Galaxy Digital – Mike Novogratz – thinks it is unlikely for bitcoin to push beyond the $30,000 price tag soon. He expects its valuation to hover between $20K and $30K for a while, which could be a good opportunity for investors to increase their exposure.
Bitcoin has been trading below $30,000 for nearly two months now. At one point in June, it even dropped to $17,500, infusing panic and uncertainty in the crypto space. In the past few weeks, though, the asset managed to stabilize itself above the $20K level and currently sits above $23K.
Far Away From the Mania in 2021
Mike Novogratz – top executive of Galaxy Digital and an outspoken supporter of the digital asset industry – is not so optimistic regarding bitcoin’s price in the short term. In a recent interview, he said investors should be grateful if the asset does not drop below $20,000.
“Will Bitcoin get through $30,000 on this move up? We will see – I’m doubtful. I think we’re going to probably be in this range now. I quite frankly would be happy if we’re in a $20,000, $22,000, or $30,000 range for a while.”
The billionaire explained his thesis with the lack of institutional flows into the industry. He thinks the current situation couldn’t be compared to the “mania” in 2021 and 2017 when numerous corporations and prominent companies entered crypto’s ecosystem.
Subsequently, Novogratz gave his two cents on Ethereum and its possible development after switching to Proof-of-Stake. The Merge should give the protocol a significant push and boost Ether’s price above $2,200, he noted.
BTC Needs Time to Recover
Two months ago, Novogratz displayed a rather similar stance, saying the primary cryptocurrency is “here to stay” despite its notorious price swings and unsatisfying current condition. The market, though, needs time to turn bullish and restore confidence among investors.
He further classified BTC, the cryptocurrency sector, and Web3 as “great technologies” and opined that more than 130 million individuals still see the leading digital asset as an appropriate investment tool:
“What happened with lots of great technologies, including Bitcoin, crypto, and Web3, is that prices got ahead of themselves… I don’t think crypto is going away.”
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The Thai-based cryptocurrency exchange – Zipmex – will reportedly enable its customers to partially withdraw some of their Bitcoin and Ether holdings, starting from August 11.
The company was one of the worst-hit entities from the bear market in the past several weeks.
- At the end of July, the platform paused clients’ withdrawals citing volatile market conditions. It also disclosed that it remains unknown when those operations will be restored as the circumstances were beyond the firm’s control.
- A few days later, Zipmex was rumored to have been discussing the problem with numerous organizations, as some have even provided a rescue plan.
- Shortly after, the Thai exchange submitted multiple applications under Section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018. Their goal was to prevent creditors from making any claims for the next six months.
- Despite all the issues, Zipmex has reportedly decided to allow its clients to withdraw some of their BTC and ETH possessions. This will be available between August 11 and August 16, while only Z Wallet owners can hop onboard (around 60% of the company’s customer base).
- Last week, Zipmex eased the withdrawals of several altcoins, too, including Solana (SOL), Ripple’s XRP, and Cardano’s ADA.
- Another Asian-based crypto firm affected by the bear market is Three Arrows Capital. In June, the company failed to meet margin calls due to the collapse of the market. A few weeks later, a court in the British Virgin Islands ordered it into liquidation. According to estimations, the firm owes around $3.5 billion to 27 entities.
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The American billionaire investor and owner of the Dallas Mavericks – Mark Cuban – believes Ethereum’s transition from a Proof-of-Work consensus mechanism to Proof-of-Stake could be a double-edged sword. In his view, the investors’ excitement surrounding the move could surpass the actual use-cases of “the Merge” and create a “sell the news” event.
Cuban also argued that applying regulations in the crypto space is a vital step that global regulators need to enforce. Investors are looking for maximum protection, and, if granted, many will enter the digital asset ecosystem and drive the sector forwards.
Cuban’s Thoughts on the Merge
The second-largest cryptocurrency protocol – Ethereum – is expected to shift from PoW to PoS later this year. The long-anticipated move is among the most discussed subjects in the crypto industry. Known as the “Merge,” the process should make Ethereum less harmful to the environment while also providing additional security to its network and faster transaction speeds.
As such, numerous investors raised hopes that the native token – Ether (ETH) – will surge, creating enthusiasm among the whole industry. Mark Cuban is also bullish on that transition. Earlier this year, he said that it could significantly cut Ethereum’s energy consumption, while Ether could turn into a deflationary asset.
In a recent interview, though, he warned that the process could create a “buy the rumor, sell the news” event. In such cases, asset prices soar considerably prior to a highly anticipated move but fail to continue the uptrend and even collapse once it is completed.
Dogecoin’s price expansion last year could be considered a typical example. When DOGE reached $0.70 in May 2021, many individuals believed its valuation could tap $1. Furthermore, Elon Musk, arguably the most notable DOGE supporter, was invited as a guest on the comedy show Saturday Night Live. There, he was meant to introduce the coin’s merits to millions of people, which could potentially boost the token’s price.
However, Tesla’s CEO did not do what the Dogecoin Army expected. Instead, he simply joked around with the show’s host. In the following hours, DOGE crashed significantly, and since then, it never reached its peak again. Currently, it trades at $0.07 – a 90% decline considering its all-time high record.
Regulations, the SEC, and the Metaverse
Touching upon other topics, such as imposing regulations in the crypto industry, Cuban said he is in favor. Like any technological innovation, the sector should grant investors maximum security so they can feel safe and enter it en masse. He also opined there is a big similarity between crypto’s current status and the Internet in its early years:
“There is the security aspect of it, and we see what is happening every day: there is a hack somewhere. It is no different than the early days of the Internet. There was a time when people said: “Don’t use Amazon because your credit card is going to be attacked, don’t any buying on the Internet because you are putting at risk your credit card.” So it’s part of the learning curve.”
Nonetheless, the American doubted that the United States Securities and Exchange Commission (SEC) could implement appropriate rules in the sector. He called the agency “incredibly hypocritical” because it seeks to halt the development of the crypto market, but at the same time, it does not focus on thousands of dubious financial products, including “pink sheet stocks.”
Cuban spoke about the Metaverse and its increasing popularity. To him, buying real estate in the virtual reality is the “most stupid” thing a person could do because there is an unlimited volume of land people could create and sell to inexperienced investors.
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Chainlink said it will not provide support for forked versions of the Ethereum blockchain after the much-anticipated shift from Proof of Work (PoW) to Proof of Stake (PoS), also known as the Merge. However, the Chainlink protocol and services will remain available during and after the Merge.
“Users should be aware that forked versions of the Ethereum blockchain, including PoW forks, will not be supported by the Chainlink protocol. This is aligned with both the Ethereum Foundation’s and broader Ethereum community’s decision, achieved via social consensus, to upgrade the Ethereum blockchain to PoS consensus,” Chainlink said in a notification on its website.
Advises Safety Measures
The blog post advised the developers and dApp teams on the Ethereum network, who are not sure about their move with respect to the Merge, to put their smart contract operations on hold to “avoid unforeseen incidents and help protect end users.”
The blockchain oracle service provider, however, assured the users on the Ethereum network that it’s doubling down on its quality assurance process to meet the challenges of the upcoming network upgrade.
“dApps operating on forked versions of Ethereum, including PoW forks, might behave in unexpected ways due to both protocol and application-level issues, introducing increased risk for users,” it said.
Speculation of Hard Fork
Chainlink is a leading smart contract infrastructure provider on the Ethereum network with significant footprints in Defi, Enterprise, and NFT & Gaming arenas. Ahead of the Merge, speculation is rife that the network will split into ETHPOW and ETH2.0 or ETHS.
Blockchain security experts point to the possibility of ETH holders getting the airdrop, and scammers might take advantage of the fluid situation surrounding Ethereum’s transition. Chainlink’s clarification, therefore, that it will not support any forked version of Ethereum in the event of a split of the network makes things clear for developers and dApps on its network.
Chainlink Driving Adoption
A Bank of America analysis in February said that Chainlink, with over $60 billion of total locked value in smart contracts, will drive mainstream blockchain adoption across industries, including gaming, gambling, and insurance.
In June, Chainlink announced that its live price feed will be available on Solana, initially for BTC, ETH, and USDC, and will later be expanded to cover other coins. The very next month, Bybit announced the integration of Chainlink’s live price feeds for 35 coins to enhance price accuracy for its spot trading services.
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