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Last week, all markets were waiting for Fed Chairman Jerome Powell’s remarks in Jackson Hole. This would be the first official indication of future trends as inflation finally showed signs of slowing for the first time in many months. Powell’s more hawkish than ever remarks, persisting in his intention to sharply raise interest rates, immediately weighed negatively on the markets. “Risk aversion is firmly back and this has sent bitcoin below the $20,000 level,” wrote Edward Moya, senior market analyst at Oanda. Bitcoin has reacted in concert with other riskier assets throughout the past few days. The cryptocurrency market has been desperately trying to keep its total capitalization above $1 trillion ever since.
Ethereum’s merger has an official launch date. The Bellatrix upgrade, which starts the final countdown, is scheduled to be activated on September 6th. The merge itself will be completed at some point between September 10th and 20th. Activation is scheduled for epoch 144896 on the Beacon chain, which should occur at about 11:34:47 UTC. After that, the total terminal difficulty (TTD) value triggering the merge will be 58,750,000,000,000,000,000,000,000. Ethereum developers have hinted in previous calls that they are targeting September 15th and 16th. The idea is that during this time, the level of difficulty will increase to the point that eventually proof-of-work mining will no longer be possible. As a picture is worth a thousand words…
Remember that some industry players propose to modify the code to cancel this difficulty bomb, which would allow recalcitrant miners to continue generating blocks on the proof-of-work chain, creating a hard fork. In this vein, the Coinbase exchange announced last week that it was considering listing the resulting token, ETHW. “At Coinbase, our goal is to list every asset that is legal and safe to list, so that we create a level playing field for all the new assets being created in crypto while continuing to protect our customers,” stated the company, in an updated portion of a statement first published on August 16. “Should an ETH PoW fork arise following The Merge, this asset will be reviewed with the same rigor as any other asset that is listed on our exchange.”
Ethermine, the world’s largest Ethereum mining group, today announced the launch of a “miner pool” service for its users yesterday. The service, dubbed Ethermine Staking, will allow users to contribute funds as small as 0.1 ETH into a massive pool of user contributions that will be collectively staked to create and earn new ETH on the new chain. This service will not be available in the United States, however. Once the merger takes place, lone validators will have to commit at least 32 ETH in order to start receiving rewards. Ethermine Staking therefore eliminates this barrier to entry by allowing users to contribute as little as 0.1 ETH. Nothing is free, however. For this service, the company will charge a sliding scale fee that decreases with the amount of ETH contributed. Users who contribute less than 32 ETH will be charged a 15% premium.
On the Ethereum side, let’s finally point out that according to Oklink data, Ethereum’s miner address balance has surpassed 260,000 ETH with a total of 261,848 ETH valued at over $415 million at current prices. Miner accumulation has reached a new four-year high with similar levels last seen in April 2018.
The increasing accumulation of ETH by miners has been attributed to several factors, the first being the anticipation of a price spike following the merge. Sentiment to this effect definitely appears bullish. Another important factor is the possible hard fork discussed above. ETH miners in favor of a hard fork in order to keep the PoW chain alive would receive ETHW tokens in equivalent numbers of their ETH balance, which could be an incentive to hold them in the short term.
Samsung is (again) considering launching its own cryptocurrency exchange in South Korea. Samsung Securities is one of seven domestic brokerage firms looking to set up a cryptocurrency exchange in the first half of next year. Talks with local authorities to obtain a license are reportedly at an advanced stage. Samsung Securities was also the first to launch an exchange-traded fund on the cryptocurrency industry in Asia. In short, there is no longer any doubt that the tech giant is getting ready to join the growing cryptocurrency industry.
An anecdote that surprises finally, as the Crypto.com platform is suing a woman after sending her $10 million by mistake. The woman requested a $100 refund from the cryptocurrency platform, only to receive $10.5 million in error – and then went on a spending spree, according to reports. This included allegedly buying a luxury home worth $1.35M. Two sisters from Melbourne, Australia, are now being sued in court. Crypto.com noticed the error during an audit in December 2021. A Crypto.com employee had mistakenly entered an account number in the payment section and sent the money. The company has since taken legal action and the Supreme Court of Victoria has ordered the sale of the house and the return of the money.
The markets are at a key level right now. For the Nasdaq, we are in an area of past resistance that will now be tested as support. It could, if it holds, allow for a reversal of this week’s downtrend. If this were to happen, a bullish technical scenario for bitcoin could end up taking shape. Indeed, it looks like it will be tracing a double bottom, a bullish indicator when a break of the neckline with volume occurs. A convincing move to $25,000 would open the door to a rise to around $31,000.
Analysis firm Ecoinometrics further notes that whales controlling between 1,000 and 10,000 BTC begin to accumulate again at these levels. “This will not in itself end the bear market, but apparently many like bitcoin at $20,000”. It is added that “In this bear market, you either want to dollar average your entries, or buy a dip and just wait.”
Rivemont Investments, manager of the Rivemont Crypto Fund.
The presented information is as of August 31st, 2022, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
