Ethereum outperforms Bitcoin as merge continues to attract attention - Cryptocurrency News



The major cryptocurrencies have been steadily climbing since mid-June, recovering somewhat from the heavy losses suffered from April and emulating the stock rebound on Wall Street. Bitcoin has gained a healthy 30% from the June low point, but its rival Ether – the world’s second most popular crypto – has staged an even more impressive comeback, rallying by about 90%. Although Ether is known to be more volatile than Bitcoin, there is more than just the bounce back in broader risk assets driving this upswing.

The merge

Ethereum – the blockchain-based platform that processes the payments made via Ether – will receive a major upgrade on September 19 when the network will merge with Beacon Chain, replacing the existing proof-of-work (PoW) mechanism with a proof-of-stake (PoS) one. PoW is currently how most cryptocurrencies like Bitcoin are mined. But this system is seen as inefficient as it requires a lot of computing power to validate incoming transactions and transaction speeds are slow. It can also be quite costly for would-be miners to invest in the right software and hardware equipment.

In comparison, PoS uses less energy, is faster and does not require miners. Instead, PoS has validators who don’t need any specialized equipment to participate. However, it does have one major drawback, which is it’s not as secure as the more proven PoW system.

A supply shock?

But the most important distinction between the two is that in proof of stake, validators have to ‘stake’ a certain amount of their coins or tokens as a form of guarantee. This is in fact the primary concept on which the PoS mechanism is built upon in that it assumes that participants staking their funds will want to do things correctly to maintain the integrity of the blockchain network so as not to lose their stake.

And this is what could prove to be a game changer for Ether and Ethereum as the method of staking will significantly reduce the supply of the coin in circulation. The annual issuance of new Ether is also expected to be affected as the amount will be determined by how much validators stake rather than the current fixed rate of approximately 4.5 million a year.

The potential deflationary impact of the switch from PoW to PoS is what’s spurring this speculative interest in Ethereum, magnifying its upside whenever cryptos are rallying.

Bullish hopes

The price of ETHUSD hit a six-week high of $1,677.51 on Thursday. If the positive momentum gathers more steam, the $2,000 level will likely be eyed next before challenging the heavily congested region of $2,500.

The problem for the bulls, though, is that a more meaningful rally may not come until after the merge in September. An improvement in the macroeconomic environment by year-end might also propel Ethereum and other cryptocurrencies higher if inflationary pressures begin to moderate in the coming months and central banks like the Fed pause hiking interest rates.

Equity markets are already encouraged by the possibility of rate cuts in 2023 despite the increasing prospect of a recession in the interim and many traders are betting that stocks have bottomed out. Given how strong the positive correlation between equities and cryptos has grown this year, this could also be true for the crypto market.

Uncertainties ahead

However, it’s also possible that the worst has yet to come. For example, Europe’s energy crisis may only just be unfolding, and the Fed risks overestimating the spending power of the US consumer. If stocks tumble again, so would cryptos.

A sharp selloff could push ETHUSD towards the 50-day moving average, which is converging with the 161.8% Fibonacci extensions of the January-April uptrend around $1,280. A breach below it would pave the way for the $900 support zone, which defended the price back in June, while steeper declines could stretch until the $500 level.

Another risk and one that is more specific to cryptos is the liquidity problems facing some crypto lending and exchange platforms such as Coinbase. It comes after crypto lenders Celsius Network and Voyager Digital recently filed for bankruptcy, fuelling fears of full-scale liquidity crisis.

More upgrades to come

For Ethereum, the hype around the upcoming merge could yet cushion it against another crash, or at the very least, expedite any rebound that follows. Moreover, further updates are planned for Ethereum, such as the ‘surge’ upgrade that will boost its transaction processing capabilities. Hence, this phase of outperformance may only be just starting.

 

면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.

온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.

이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.

우리는 웹사이트에서 최고의 경험을 전해드리기 위해 쿠키를 사용하고 있습니다. 자세히 읽거나 쿠키 설정을 변경하세요.

리스크 경고: 고객님의 자본이 위험에 노출 될 수 있습니다. 레버리지 상품은 모든 분들에게 적합하지 않을수 있습니다. 당사의 리스크 공시를 참고하시기 바랍니다.