Blockchain News

Chung’s Weekly Digest (9/12)

Our financial market analyst Chung Yee says: The crypto market is exuberant as The Merge draws closer, pushing the total market cap to $1.12 trillion.

Pre-Merge Rally

Bitcoin ($BTC) is leading the pack with an 11.8% gain from a week ago as the crypto market heats up to one of the most critical upgrades in the crypto space.

Bitcoin decisively broke above the crucial $20K mark as buying interest returns to the crypto market.

The Merge is set to take place on Sept. 15 around 5 a.m. UTC and will be monumental. Ethereum ($ETH), the second-largest crypto asset by market cap, will change from its current ProofofWork (PoW) to a ProofofStake (PoS) consensus protocol.

The Merge is highly anticipated because it removes some of the hurdles to adoption for institutions. These concerns are:

  • The network’s ability to scale and the speed of transactions
  • High consumption of energy and environmental concerns

The network becomes more decentralized and there will be a broader pool of validators. Anyone can now participate as a validator without the need to invest in the hardware required for mining.

The hardware hurdle imposes a high barrier of entry for validators and by lowering the barrier of entry, network security is expected to improve.

Despite the renewed confidence in crypto assets following the recent rally, the prospect for risk assets remains bleak as the U.S. Federal Reserve (Fed) is still battling with inflation. August’s Consumer Price Index (CPI) will be released Tuesday and some profit-taking might take place.

Some market observers believe that the market bottom has formed but the road ahead appears bumpy as several key levels must first be breached before a trend reversal can be confirmed. One of the most crucial indicators is the 200-week moving average of $BTC which sits at $23,200.

The bear trend will be snapped if $BTC breaks above the 200-week moving average and stays above it

Weekly Recap

Market Sentiment

Bitcoin’s hash rate has hit another all-time high, making the network stronger and more resilient than ever. Hashrate is an important indicator that the network is alive, robust, and secure. It can also be seen as a vote of confidence for the network.

Bitcoin is primed for another macro uptrend as it draws closer to the halving event, which is expected to take place on March 1, 2024. Bitcoin’s halving event is usually the catalyst for significant price rallies. Institutions are now considering crypto assets as a viable asset class and will be prepared to allocate a certain portion of their reserves in this new asset class.

This trend will likely continue as the fear of dollar’s devaluation brought about by inflation is likely to be a major concern. Public companies such as MicroStrategy is leading the way with a very aggressive and bullish positioning.

MicroStrategy remains unfazed by the current bear market and continues to double down on its conviction on the leading crypto asset.

Coins to Watch

  • Ethereum ($ETH) - Ethereum will be completing its transition to PoS this week. The Merge is currently the theme for this week as interest in Ethereum is expected to spike.
  • A further aside is expected as the crypto market is riding on the upward momentum that is spurred by The Merge.
  • Volatility is expected after The Merge and traders will lock in their profit.
  • The Sandbox ($SAND) - The metaverse theme is far from over. More brands will be looking at metaverse platforms such as The Sandbox to stamp their presence in the virtual world.
  • Institutional interest has yet to spike for this metaverse theme. The previous market cycle is a mere glimpse of the potential upsides for this crypto asset.
  • $SAND hit an all-time high of $8.40 in November 2021 with plenty of room for further upsides in the upcoming market cycle.
The metaverse narrative has yet to peak and the next market cycle will likely see projects such as The Sandbox stamping its presence in the crypto space
    • Cardano ($ADA) - Traders will be speculating on coins such as $ADA for some upside potential as it heads into the most important upgrade in its history.
    • The Vasil Hard Fork is a radical change that will bring about a permanent divergence from its current blockchain.
    • Layer-one platforms such as Cardano play an important role in the smart contract ecosystem by providing an alternative to Ethereum.
    • Cardano was launched in 2017 and has a track record and a thriving ecosystem.

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