Crypto Markets Surge Higher Ahead Of The Merge
Major cryptoassets such as Bitcoin (BITCOMP) and Ether (ETH-X) surged last week, as markets continued to digest positive news and developments in economic conditions.
Bitcoin has come close to recapturing $25,000 for the first time since June, although it didn't quite reach the milestone last week on the eToro platform. It is currently trading around $24,000 having begun last week below $23,000.
Ether meanwhile surged across the week, having begun below $1,700 - reaching within touching distance of $2,000 on Sunday, having reacted positively to updates on The Merge (more on that below). It is currently trading around $1,890.
Both cryptoassets and the market more generally reacted positively to lower-than-expected US inflation in midweek, reaffirming the recent performance links with equities.
Institutions line up to get back into crypto
The crypto sphere has been alive with discussions around a series of institutional announcements relating to crypto. In the past few days we’ve had Abrdn buy a stake in Archax, BlackRock (BLK) announce a spot bitcoin trust and also announce a tie up with Coinbase (COIN) for institutional investors in crypto.
With other examples of institutional dealmaking and investments now widely available, there is a clear trend to observe for private investors. Firstly, with market valuations still well behind previous highs, institutions are clearly putting a foot on the ladder at attractive price points. But they are also making a more fundamental commitment to the sector and its innovations.
We’ve seen crypto markets move in step with equities in recent months and this is a quantifiable signal that institutional players are more heavily invested in the sector. But these various movements by major players such as Abrdn and BlackRock - while not immediately supportive of price - do reflect an underlying confidence in the sector that the wider market would be wise to watch going forward.
The Merge could happen September 15
The Merge - which will see the Ethereum network shift from Proof-of-Work (PoW) to Proof-of-Stake (PoS) underpinning could have a potential go-live date - September 15.
In terms of how the market is reacting there is now obvious evidence that it is becoming more actively sensitive to developments on The Merge. The price has been on an upward trajectory and has reacted positively to developments as investors buy into the token ahead of the change.
But there is a more fundamental long-term potential here - the PoS change will alter the economics of the token. While other blockchains already use PoS, none have the sheer scale and variety of uses compared to Ethereum.
With scarcity and staking incentives built into the development, the switchover could be a huge shift for associated token. How much is already priced in remains to be seen, but some investors could still be keeping their powder dry until the change beds in.
Cardano overtakes XRP
The token for the Cardano blockchain, (ADA-X), has overtaken Ripple (XRP-X) in terms of market capitalization to make it the 6th largest cryptoasset, data from CoinMarketCap shows. ADA now has a market cap of just under $20 billion, some $90 million higher than XRP.
While these changes in isolation don’t give a major indicator to the way the market is moving, what is clear is that a highly competitive market is continuing to develop, and that is a good thing. Cardano, like Ethereum, has undergone some considerable changes to its network in order to increase its innovation for users and investors.
It’s great to see that the market continues to tick over despite the tough trading conditions of the past few months. Investors should always try to remain diversified among the assets they invest in, but as long as the sector remains competitive and innovative the signs are positive for the future.
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Disclaimer: This article should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been ...
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