POSSIBLE NEW TRENDS THAT WILL DRIVE THE CRYPTO MARKET IN THE POST-MERGE ERA
The Ethereum Merge has come and gone, leaving investors wondering what the next trending development in the market might look like. Taking to the Cointelegraph Twitter Space with Capriole Fund founder Charles Edwards, the analyst mentioned that the excitement surrounding the Ethereum Merge and its bullish price action has somewhat kept hope across the market. Now that the event has come and gone, the crypto market is selling off, with Bitcoin (BTC) trading below $20,000 and Ether (ETH) below $1,500.
Eventually, new stories and market trends will emerge, and if the fundamentals are right, traders will rotate funds as these new leaders emerge.
Where will former ETH miners go?
The Ethereum network has successfully transitioned to a proof-of-stake (PoS) model, meaning miners are out of pocket, but still possibly own the GPU and ASIC mining infrastructure. It is possible that some miners may choose to mine on another chain instead of selling their equipment.
While they haven't settled on any particular chain yet, Ravencoin, Flux, Ethereum Classic, and Ergo seem to be frontrunners. As a result of the merger, each network saw its hash rate rise to new all-time highs, as shown below.
Every altcoin's prices have also increased over the past month, with Ravencoin's RVN up 169%, Ergo's ERG adding 132%, Flux gaining 156%, and Ethereum Classic's ETC up 135% over the past 90 days.
Interestingly, the hash rate and price dropped sharply on September 15th, and at the time of writing, Flux and RVN seem to be rebounding. In the coming weeks and months, it will be interesting to see which network miners eventually choose as their new home and what impact this will have on the price of the cryptocurrency.
The cosmos is still expanding
The Cosmos ecosystem continues to grow, which seems to be a draw for buyers to ATOM. Since bottoming at $5.50 on June 18, ATOM has risen 137.5% and is currently trading above $16. The analysis suggests that investors view the soon-to-be-launched liquid staking, the use of ATOM as collateral for stablecoin mining, the launch of Cosmos Hub 2.0, and the eventual revival of decentralized finance in general as bullish long-term factors for the ATOM price.
Buy the rumor and sell the news, or buy the dip?
While the current ETH price action is less bullish than Merge supporters and ETH bulls might have hoped, the actual transition to PoS appears to be successful and perhaps over time the benefits of PoS will carry over into the bullish price action from ETH. According to Jarvis Labs co-founder Ben Lilly, it's not a "Joe Cool move" for ETH investors to “not get caught up in the coming days. The main player who is likely to do any crazy activity is the miner. And that's a one-time event that will be short-lived."
Lilly explained that:
“Joe Cool's move is to sit and buy any type of overly emotional move. Then sit down and take it easy.”
In the future, Ether could experience a supply shock and possibly become deflationary. Staking further secures the network while providing guaranteed returns on the stored assets. In a market stuck in a downtrend, getting a safe and predictable return could become more attractive.
Essentially, Lilly suggests that it will take some time for the fervor surrounding the merger to settle down and for investors to start reaping the benefits that Ethereum's PoS network could offer.
What about Bitcoin?
In this week's Bitcoin analysis, I discussed how much hasn't really changed with the price of Bitcoin. Its price has remained in the $17,600-$24,400 range over the past three months, and all gains from each range since March 29 have been capped by the 200-day moving average and the overhead trendline resistance that extends from Bitcoin. All-Time High November 2021 at $69,400.
While continued consolidation within the current range could (and usually would) be good for altcoins, macro tensions may continue to affect crypto and equity markets. The hot CPI print on September 12 could lead to more aggressive rate hikes by the United States Federal Reserve, and a potential knock-on effect on stock prices could have an even sharper effect on cryptocurrency prices.
Because of this, investors remain largely risk-averse to most cryptocurrencies, and it is possible that repeated rejections of the long-term downtrend line and further retests of the $19,000 support could eventually lead to a dip below the annual swing low.
This newsletter is written by Big Smokey, author of The Humble Pontificator Substack and resident newsletter writer at Cointelegraph. Every Friday, Big Smokey will write market statistics, trends, how-tos, analysis and early research on potential new trends in the crypto market.