What’s next for Bitcoin and the crypto market now that the Ethereum merger is over?
The Ethereum rally came and went, leaving investors wondering what the next trend development in the market might look like. In a Cointelegraph Twitter Space with Capriole founder Charles Edwards, the analyst mentioned that excitement over the Ethereum merger and its bullish price action had kept hopes up throughout the market. Now that the event has come and gone, the crypto market has sold off, with Bitcoin’s (BTC) price trading below $20,000 and Ether’s (ETH) below $1,500.
Eventually, new narratives and market trends will emerge, and if the fundamentals are correct, traders will rotate funds as these new leaders emerge.
Let’s take a look at some potential trends.
Where will the former ETH miners go?
The Ethereum network successfully shifted to a proof-of-stake (PoS) model, meaning miners are out of pocket but still own their GPUs and ASICs mining infrastructure. It is possible that some miners choose to mine on another chain instead of selling their equipment.
Although they haven’t decided on any particular chain yet, Ravencoin, Flux, Ethereum Classic and Ergo seem to be the frontrunners. Leading into the merger, each network saw its hash rate rise to new all-time highs, as shown below.
The prices of every altcoin also rose in the past month, with Ravencoin’s RVN up 169%, Ergo’s ERG up 132%, Flux up 156%, and Ethereum Classics ETC up 135% in the past 90 days.
Interestingly, the hashrate and price dropped sharply on September 15th, and at the time of writing, only Flux and RVN seem to be on the rise again. Over the coming weeks and months, it will be interesting to see which network miners eventually choose as their new home and what impact this has on the cryptocurrency’s price.
The Cosmos continues to expand
The Kosmos ecosystem continues to expand, which seems to be attracting buyers to ATOM. Since the bottom of $5.50 on June 18, ATOM’s price has risen 137.5% and is currently trading above $16. Analysis suggests that investors see the soon-to-be-launched liquid stake, ATOM being used as collateral for stablecoins, the launch of Cosmos Hub 2.0, and the eventual recovery of decentralized finance in general as positive long-term factors for the ATOM price.
Buy the rumor and sell the news, or buy the dip?
While ETH’s current price action is less bullish than Merge supporters and ETH bulls might have hoped, the actual shift to PoS appears to have been a success, and perhaps over time the benefits of PoS will translate into bullish price action from ETH. According to Jarvis Labs co-founder Ben Lilly, the “Joe Cool move” for ETH investors is not to “get caught up in the coming days. The main player who is likely to do some kind of crazy activity is the miner. And it’s a one-time event that shall be short-lived.”
Lilly explained that:
“The Joe Cool move is to sit there and buy all kinds of overly emotional moves. So sit back and take it easy.”
In the future, Ether may experience a supply shock and possibly become deflationary. Staking further secures the network while providing a guaranteed return on deposited assets. In a market stuck in a downward trend, it can become more attractive to obtain a safe, predictable return.
Essentially, Lilly is suggesting that it will take time for the fervor surrounding the merger to die down and for investors to start taking advantage of the benefits that the PoS Ethereum network can offer.
What about Bitcoin?
In this week’s Bitcoin analysis, I discussed how not much has changed with Bitcoin’s price. The price has remained range-bound in the $17,600-$24,400 range for the past three months, and any rally off each range-high since March 29 has been capped by the 200-day moving average and an overhead resistance trendline extending from Bitcoins. November 2021 all-time high of $69,400.
While continued consolidation within the current range can (and typically will) be good for altcoins, macro tensions could continue to weigh on crypto and equity markets. The hot consumer price index print from September 12 could lead to more aggressive rate hikes from the US Federal Reserve, and the potential ripple effect on stock prices could have an even sharper ripple effect on crypto prices.
For this reason, investors remain largely risk-averse to most cryptocurrencies, and it is possible that repeated rejection, a long-term descending trend line and repeated testing of the $19,000 support could eventually result in a breakdown below the yearly low.
This newsletter was written by Big Smokey, the author of The Humble Pontificator Substack and resident newsletter writer at Cointelegraph. Every Friday, Big Smokey will write market insights, trending how-tos, analysis and early research on potential new trends within the crypto market.
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