Weekly Crypto Analysis: Markets Set for ETH Merge and PoS Transition

After quite some lull recently, the past week was good for cryptocurrencies. Friday saw Bitcoin (BTC) spike more than 10% over optimism that a decline in inflation could convince the Fed and other central banks to cut interest rates in 2023. In addition, the second largest crypto by market cap, Ethereum (ETH), also enjoys gains as investors gear up for The Merge - the blockchain’s transition from Proof of Work (PoW) to Proof of Stake (PoS) consensus.

Cryptocurrency Market Heatmap | Source: Coin360

The total cryptocurrency market volume in the past 24 hours improved by 20.79% to $83.20 billion, a significant jump since the previous week. The global crypto market cap has bounced back above the key $1 trillion mark to $1.06 trillion after falling under this level a week ago.

Let’s explore the biggest movers in the crypto market and some of the biggest news that can move markets.

After falling under the key $20,000 mark, Bitcoin rebounded past this level and rose past the $21,000 level. After strengthening by over 10% on Friday, the crypto king BTC/USDT enjoys bids over expectations of the Fed possibly cutting interest rates as inflation comes under control.

Meanwhile, ETH/USDT has jumped back above the $1,700 mark as the date for The Merge approaches. The enthusiasm has spilled over beyond crypto enthusiasts into the mainstream after leading search engine Google also adds a countdown clock for the upcoming event. Ethereum has gained 9.37% for the week, while Bitcoin is trading 8.66% higher.

The top-performing altcoins over the past week include Terra (LUNA), Golem (GLM), and Ravencoin (RVN). Terra’s LUNA was the crypto moon of the past week, soaring by more than 166%, followed by GLM, which strengthened by over 83%. RVN eked out more than 66% gains in the past week, ranking as the third-highest gainer in the market.

However, some coins traded in the red through the period, although their losses were small in comparison. The biggest losers among altcoins include Next (NEXO) which is down by 5.94% for the week, followed by UNUS SED LEO (LEO), which lost 2.54% of its value, and Fei USD (FEI), which is down by 0.35% over the past seven days.

Top Altcoin Gainers

Terra (LUNA) 166.47%

Golem (GLM) 83.94%

Ravencoin (RVN) 66.78%

Top Altcoin Losers

Nexo (NEXO) 5.94%

UNUS SED LEO (LEO) 2.54%

Fei USD (FEI) 0.35%

Here are some of the biggest headlines and market-moving updates from the world of cryptocurrencies to monitor:

Ethereum Set for PoS Transition This Week

The Ethereum Merge, or Ethereum 2.0, is all set to happen this week, a landmark event in crypto markets when the Ethereum blockchain transitions from a proof of work consensus to a proof of stake model. After years of waiting and criticism, the leading platform for dApps is all set to migrate to more energy-efficient operations following The Merge.

After six years of work, the Merge is expected to happen on 15 September 2022 as per estimates. The migration will occur when the Terminal Total Difficulty (TTD) threshold is reached, the total difficulty threshold required to mine the final block of the PoW Ethereum blockchain. Following this, the PoS consensus will take over, rolling out a new era for the second most popular cryptocurrency and its underlying blockchain.

Fed Could Cut Interest Rates in 2023

Last Friday, there was much optimism in global financial markets that cooling down in inflation could encourage the Fed to scale back its plans of aggressively hiking interest rates. All eyes will be on the upcoming CPI report releasing in the US market this week.

A softer than expected figure could aid the rally in risk assets, including cryptocurrencies. Analysts at ING have forecast a high likelihood that the US central bank could cut interest rates by June 2023 if gasoline prices continue declining and input costs and house prices slide lower.

The move could encourage investors to buy back into riskier instruments such as equities and crypto markets. The crypto market has been experiencing considerable pressure to the downside over concerns of rate hikes by the Fed and other central banks, which could drain liquidity from markets.

Terra (LUNA) Enjoys a Bull Run in the Past Week

One of the recent surprising gainers in the crypto market is Terra (LUNA). The new cryptocurrency emerged into the spotlight after spiking to as high as $6.32 on Sunday.

However, it has given back some of its gains after registering steep losses of nearly 20% and fallen back under the $6 mark. The profit taking among investors could be why LUNA price slides lower on Monday, although it remains far higher than its ATL from May 2022, when the coin first hit the market.

The latest bullish moves in the cryptocurrency could result from the Terra community approving a proposal for airdropping more than 19 million LUNA tokens till October 4. There is also a likelihood that the LUNC community’s proposal to impose a 1.2% tax burn could also be driving LUNC holders to sell their crypto to buy LUNA/USDT, sending the Terra token higher lately.

MicroStrategy Plans to Buy $500m Worth of Bitcoin

In its latest filing with the SEC, MicroStrategy disclosed plans to sell as much as $500 million of Class A stock. The proceeds from the sale of stocks are expected to towards buying Bitcoin.

The firm is already the single largest corporate holder of Bitcoin and plans to shore up its BTC ownership with this move. MicroStrategy’s plans to buy Bitcoin as it trades close to the $20,000 mark could boost investor confidence and catalyze buying activity in the cryptocurrency among retail investors in the near term.

Indonesian Government to Launch Its Own Crypto Exchange

Another exciting news update that could help lift the mood in the cryptocurrency market reports about Indonesia’s government looking to launch its own cryptocurrency exchange as soon as the end of 2022. The move, which will give a shot in the arm towards legitimizing digital assets from a regulatory perspective, aims to protect consumers as the country’s citizens increasingly turn towards cryptocurrencies.

The island nation’s official cryptocurrency bourse was initially planned for 2021, but the government is treading cautiously to cover all aspects of the market before launch. Such a development can increase interest in digital assets among retail investors and encourage more institutional investment in the market.

Cardano Gearing Up For Vasil Hard Fork Soon

Cardano’s major network upgrade, the Vasil hard fork, is scheduled for September 22. There has been considerable buying activity in ADA/USDT ever since Input Output Hong Kong (IOHK), the firm behind the blockchain’s development, confirmed the date for the rollout.

The major upgrade to the Cardano blockchain will make the network more scalable while reducing transaction costs significantly. Ahead of the event, there has been increased buying interest in Cardano (ADA), especially among whales or large holders of the crypto. The sentiment supports the Cardano price in the market before the hard fork is implemented.

-14 September 2022 - eCash (XEC) - Mainnet Post-Consensus

-15 September 2022 - Ethereum (ETH) - Mainnet Merge

-15 September 2022 - Modefi (MOD) - Public Beta Release

-15 September 2022 - Ambrosus (AMB) - AirDAO Launch

-15 September 2022 - Keep Network (KEEP) - Staking Client Launch

-15 September 2022 - HyperonChain (HPN) - Testnet Launch

-15 September 2022 - Wam (WAM) - Token Burn

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