Crypto Market Review, September 16

Despite the successful Ethereum merger, most altcoins, even those that benefited from the update, are moving into the red zone. Ethereum Classic, which gained more than 200% to its value before the merger, is not showing anything exceptional in recent days as the asset’s value plunged by more than 12%.

Cardano also remained anemic with less than 5% of its average daily volatility and decreasing trading volume. Despite being one of the alternatives to Ethereum in terms of network use and purpose, investors do not seem to be interested in Hoskinson’s blockchain, which actually offers many benefits to developers and users.

Fortunately, there is a hidden growth factor for Cardano, which is a potential regulatory crackdown on Ethereum that will lead to an outflow of funds from the second largest network in the market towards certain alternatives, one of which is Cardano.

Ethereum follows the “sell the news” rule.

With the successful Merge update, selling pressure in the Ethereum market was close to non-existent as no major issues were noticed during the transition. However, we saw a rapid increase in negative trading a few hours after the PoW went down.

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In just a few hours, Ethereum lost almost 10% of its value, making the Merge a negative event for investors in a short-term perspective. Meanwhile, it’s safe to say that the reaction of the second largest cryptocurrency on the market has nothing to do with the fundamental update itself.

Over the past few weeks, Ethereum has beaten the majority of the cryptocurrency market by more than 50% in terms of price performance, and the merger is likely the main reason for that. Ethereum-related factors mostly caused the correction we see today, such as negative sentiment among investors and the general depression in the digital asset market.

Bitcoin or Ethereum?

With the Merge update, Ethereum has differentiated itself to the maximum from Bitcoin, which is why we are going to see a big experiment in the next few years that will determine which network will prove to be more decentralized and sufficient, even if they have two completely different purpose.

Bitcoin cannot be used to build decentralized applications, NFT collections and other solutions that will increase its use. The scalability of the network is also a major problem. That is why the most popular and only use for BTC is payments. With relatively low fees, users can trade almost any volume abroad and avoid the use of third parties.

The PoW mechanism is often considered the only way to give real value to digital assets as they are given a certain cost basis and should not fall below it. Unfortunately, this thesis was debunked several times when the price of the first cryptocurrency plunged below the 1 BTC mining cost level.