First Mover Asia: Ethereum ‘merger’ sparks mixed sentiment among analysts; Bitcoin is flat | Cryptocurrency

Some observers wonder if Ethereum can remain relevant after moving from a proof-of-work model, but others are optimistic about moving to a proof-of-stake design; cryptos are having a mixed day.

Hello. Here is what happens:

Price: Bitcoin Remains Range Constrained; some altcoins are outperforming.

Insights: Analysts’ opinions differ on the Ethereum Ropsten merger.

Technician Advisory (Editor’s Note): Technician Advisory is on hiatus today.


Bitcoin (BTC): $29,999 -0.9%

Ether (ETH): $1,782 -0.8%

The biggest winners

Asset Teleprinter Returnal DACS sector
Chain link LINK +3.3% Computing
Polygon MATIC +2.7% Smart contract platform
Spotted POINT +1.3% Smart contract platform

The biggest losers

Asset Teleprinter Returnal DACS sector
Algorand ALGO −4.6% Smart contract platform
internet computer PCI −4.2% Computing
Litecoin SLD −3.2% Currency

Bitcoin Remains Stable; Some Altcoins Do Better

Thursday was another “groundhog day” for bitcoin.

The largest cryptocurrency by market capitalization rose a bit, fell some but still remained firmly anchored around the $30,000 threshold where it has camped for much of the past five weeks as investors waited for the latest data. consumer price index (CPI) on Friday.

Bitcoin was recently trading at around $30,000, roughly flat over the past 24 hours. Ether, the second-largest crypto by market capitalization, was changing hands just below the $1,800 level, roughly where it was perched a day ago and for the past few weeks. Other major altcoins were mixed with LTC over 3% at one point and ADA and CRO down around a full percentage point. Among the winners, LINK continued its recent surge, rising more than 6% at one point, while SOL was up more than 3%.

“Bitcoin continues to hover around the $30,000 level as crypto traders await a key inflation report that could influence market expectations of what the Fed might do in September,” wrote Edward Moya, Oanda’s senior analyst for the Americas, in an email.

The announcement by the European Central Bank (ECB) that it would start raising interest rates next month sent major European and then US indices plummeting first, with the latter plunging at the last hour to post their highest sharp decline since mid-May. Tech companies were among the hardest hit, with the tech-heavy Nasdaq dropping 2.7% and the tech component of the S&P 500 about the same. The ECB announced that it would raise rates by a quarter point in July to fight inflation and that it would raise rates later in the year.

The US CPI is expected to post inflation still well above 8%, its highest level in four decades. The US central bank will likely raise interest rates another half percentage point at its next meeting to match its most recent rate hike last month. Meanwhile, energy prices continued to hover around 2022 highs, with Brent crude, a benchmark for global energy markets, closing at around $123 a barrel, an increase of around 60 % since the beginning of the year.

“Inflation is hot and will remain hot and rate hike expectations should continue to climb after each monthly inflation report,” Moya wrote.

Cryptos have suffered their own latest mini-outbreak of bad news with separate reports that South Korean authorities are investigating TerraForm Labs for the collapse of its stablecoin terraUSD (UST), and that the US Securities and Exchange Commission investigated whether the Singapore-registered company violated US laws in its marketing of the UST and the LUNA token that backs it.

“It has been a messy few weeks for cryptocurrency, filled with lawsuits, scams and waning interest as prices have remained pegged,” Moya wrote. “Crypto needs some new catalysts to get out of this slump and it could take a while. »


S&P 500: 4,017 -2.3%

DJIA: 32,272 -1.9%

Nasdaq: 11,754 -2.7%

Gold: $1,847 -0.2%


Analyst Opinion Differs on Ethereum Ropsten Merger

Ethereum’s Ropsten public testnet underwent a “merger” on Wednesday ahead of a possible mainnet rollout. The move precedes a much-anticipated shift from the current Proof-of-Work (PoW) network to a Proof-of-Stake (PoS) design.

PoW refers to a validation model that relies on entities called miners that use computing resources to validate transactions and support a blockchain network. PoS, on the other hand, relies on network “validators” that lock relevant tokens on nodes to process transactions and support the network.

PoS systems are considered more environmentally friendly than PoW and help create a cheaper and faster blockchain. A move to PoS would alleviate recurring criticisms of Ethereum’s network, such as network fees. Fees, for example, crossed over $12,000 worth of ether (ETH) per transaction earlier this year when non-fungible tokens (NFTs) tied to the popular Bored Ape Yacht Club ecosystem were offered to the public.

Moving the blockchain from one consensus mechanism to another is a complex change, requiring multiple tests on testnets like Ropsten before they are finally rolled out to the mainnet.

Currently, the Beacon Chain is the PoS coordination chain that already has validators creating and validating new blocks in tandem with the main PoW execution chain. Once the PoS chain has been properly tested and secured, the two chains will merge and Ethereum will continue as the PoS blockchain.

A move to PoS will cause a change in the dynamics of the ether market. Supply would likely decrease as fewer coins would likely be issued, while expected returns of over 7% for stakers would increase demand for ether.

Such predictions have led to positive sentiment among investors, with some, like prominent billionaire tech investor Mark Cuban, saying they are “very optimistic” about the future of the asset.

However, market watchers and developers in the cryptocurrency space remain mixed.

Brad Yasar, the founder of decentralized finance (DeFi) platform EQIFI, said in an email that while there are benefits to the move to PoS, Ethereum’s PoW model has been its main feature so far.

“As much as a transition from POW to POS is seen as the next step in Ethereum’s future and should resolve several key challenges facing the blockchain, it is important to note that PoW was Ethereum’s DNA,” said Yasar said. “New blockchains that copied Ethereum Virtual Machine (EVM) and changed the validation mechanism or block structures or fees have since been launched, but none have been able to take control of Ethereum . »

Yasar said Ether’s recent price drop was partly due to “uncertainty within the community that has supported Ethereum by mining it.”

“Miners are an important segment of any PoW blockchain community that Ethereum will alienate once it becomes PoS. The long-term impact of this change may be significant as many Ethereum supporters will leave [the blockchain] for other opportunities,” Yasar explained.

“All the benefits of a reduced carbon footprint, reduced fees, etc., may not be enough to keep Ethereum relevant in a post-PoW world,” he added.

Others, however, remain optimistic about the merger’s prospects, especially given the significant reduction in environmental impact.

“We should not underestimate the importance of Ethereum’s move from proof-of-work to proof-of-stake,” Chief Strategy Officer Austin Kimm said in a Telegram message. “It’s just a test, but at least it means Ethereum is on track to do what it promised. »

“Billions of complicated processing calculations will no longer be required and it is expected that this will reduce power consumption to negligible levels. Multiply that by literally thousands of tokens created on Ethereum and that should be a major milestone in global cryptocurrency adoption,” Kimm said, adding that his company remains “very optimistic about the future of Ethereum.”

Estimates for a full PoS deployment on the mainnet are in the last quarter of this year. However, a few features, such as the ability to withdraw staked ETH, will have to wait until the merger is complete, as discussed earlier.

Once Ethereum transitions from PoW to PoS, validators that have staked the required 32 ETH will support adding new blocks to the blockchain.

Important events

Consensus 2022 by CoinDesk

Publication of the consumer price index in the United States

09:30 HKT/SGT (01:30 UTC): China Consumer Price Index (Monthly/Yearly/May)

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First Mover Asia: Ethereum ‘merger’ sparks mixed sentiment among analysts; Bitcoin is flat | Cryptocurrency

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