Why Ethereum drew crypto higher today

What happened

Saturday has been a wild trading day in the crypto market and the day is just over half. About 11:45 a.m. ET Ethereum (ETH 6.17%) quickly jumped around 10% and these gains have come to other cryptocurrencies.

From 15.00 ET Ethereum is up 6.8% on the day and from lowest to high jumped as much as 19.5%. Solana (SUN 3.75%) is up 5% the last day, but 11.6% from low to high. Finally, Arweave (YEAR 15.14%) has fallen 12.9% in the last 24 hours.

So what

The reason for the large increase seems to be large buyers, also known as whales, who are increasing their positions in Ethereum. Blockchain analytics firm IntoTheBlock reported on Friday that the largest 1% of Ethereum owners have increased their positions after “The Merge” was tentatively scheduled for September.

“The Merge” is a transition from a proof-of-work consensus mechanism to proof-of-stake, which means that the revenue stream for confirming blockchain transactions will go from miners who perform calculations to stakers, who simply “set” their Ethereum. Today’s speculation may be that large buyers will invest in Ethereum, and take it off the trading market.

It is likely that other cryptocurrencies followed Ethereum higher as investors followed whales into the market. In a volatile market such as crypto, momentum can lead to more speed in trading.

What now

Today’s move does not seem to be driven by any real fundamental change in the crypto market, but for the most part it is good news. If “The Merge” is completed this fall and lowers costs and increases the transaction speed of Ethereum, it would be bullish for the crypto industry overall. Ethereum has the most developers and many cryptocurrencies are simply tokens on Ethereum, so a faster base blockchain would be good for everyone.

That said, I think the current move is mainly noise for crypto investors in the long run. A move that happens so fast can fade quickly, and we have seen some of the pop fade.

What I will see over the next few months is the changed regulatory environment and continued liquidations from crypto borrowers. Regulatory security can actually help the industry in the long run, and if bankruptcies and liquidation of lenders end, it could be good news for the crypto markets in general.

I continue to be optimistic about cryptocurrencies and their disruptive potential in technology. The blockchain is a unique ledger for data and developers who can take advantage of this opportunity can open up new opportunities for innovators. This innovation will help cryptocurrencies, but it will be a bumpy ride along the way.