ALSO: Ethereum merge drama continues as traders pile out, then back in
The latest moves in crypto markets, in context Was this newsletter forwarded to you? Sign up here. |
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Good morning, and welcome to First Mover. I'm Lyllah Ledesma here to take you through the latest in crypto markets, news and insights. In today's newsletter: - Price Point: The total crypto market capitalization has fallen below the $1 trillion mark. Also, bitcoin's 200-week moving average multiple, a critical level of support used to determine an overall long-term market trend, is suddenly trending down.
- Market Moves: Ethereum Merge drama continues as traders pile out, then back in. CoinDesk's Jimmy He looks at what traders are doing.
- Chart of the Day: Data shows the Merge is increasingly being mentioned on social media.
Inflation data and ongoing macroeconomic uncertainty can move the crypto market needle at a moment's notice. Subscribe to Market Wrap, our end of day market update, to stay abreast of the latest. |
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Bitcoin (BTC) and ether (ETH) gained ground slightly Tuesday as markets continued to stabilize following last week's bloodbath. U.S. stock futures posted modest gains and bond prices edged up. Over the last seven days, BTC is still down 10% and ETH by 12%. This has pushed the overall market capitalization to below the $1 trillion mark. |
Total Crypto Market Cap (TradingView via Crypto AG) |
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The one-day Heiken Aishi (average bar) candles called a reversal this week as the open/close spread is very tight. Some analysts are expecting the upcoming Merge, a major milestone for the second-largest blockchain, Ethereum, to have a positive impact on the crypto market as a whole, while others are saying it will have little effect on price. |
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"A short-term rally towards $1.2 trillion is plausible, but I would expect the market to keep being range-bounded going into the Merge," wrote David Scheuermann, analyst at Crypto Finance AG in a market note.
Another indicator, bitcoin's 200-week (200W) moving average multiple, a critical level of support used to determine an overall long-term market trend, is suddenly trending down.
The 200W moving average is a critical level of support used to determine an overall long-term market trend. The trendline measures the average price of BTC over the prior 200 weeks.
Bitcoin's 200W Moving Average Multiple (Kraken) |
According to data from Kraken, BTC is trading at 0.9 times its 200-week moving average, which is down 0.3% week-over-week, now at $23,118. At the current 200-week moving average, a 10x to 15x multiple (historical range) implies a price range of $231,188 to $346,782, according to a report from Kraken Insights. In March 2021, the multiple hit a local high of 5.8x before entering into a downtrend. In the news, crypto exchange Coinbase faces a class action lawsuit over alleged lapses in security. Filed in a Georgia court, the suit alleges the crypto exchange failed to secure users' accounts against theft and hacks, and seeks damages upwards of $5 million. Andreessen Horowitz, months after it established a $4.5 billion crypto fund, the venture capital firm has said it sees the crypto-market slump as an investment opportunity. The company said crypto can shift power away from big internet companies in a report. Also, CoinDesk's Amitoj Singh was on the ground in Istanbul for Eurasia's largest blockchain conference. You can read more about it here. |
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Ethereum Merge Drama Continues as Traders Pile Out, Then Back In |
For the past month, crypto markets have been buffeted by speculation over the potential impact of Ethereum's (ETH) coming Merge – a major milestone for the second-largest blockchain. A key question is how the shift to a proof-of-stake system, which is supposed to be faster and more energy-efficient than the current proof-of-work protocol, will affect prices for ether and related digital assets. And with the event now approaching, expected next month, the market narrative keeps twisting. According to a weekly report from the data provider Kaiko, ether's steep price plunge on Friday brought a swift decline in open interest on derivatives – contracts that traders used to make leveraged bets on the cryptocurrency's future price. Many traders had their derivatives trades liquidated, or wiped out due to margin calls, according to Kaiko. But on Monday, money flooded back into the ETH futures market, the data provider found. "As the price dipped below $1,600, we observed a significant spike in open interest," Kaiko wrote. |
Ether perpetual funding rates There's also been plenty of movement in funding rates on ether perpetual contracts, which are similar to futures contracts on commodities but without expiration dates. The funding rates recovered to near-neutral levels after dipping alongside the token's price. "When combined with the spike in open interest we observed this morning, it seems these new positions in ETH futures are biased long and investors are bullish at these price levels," Kaiko wrote. Trading volumes flipped |
Separately, ether's share of the weekly, combined trading volume of ether and bitcoin hit 57%, the highest since 2018. This trading activity exceeded Ethereum's previous peak of 55% during the May 2021 crypto sell-off. "The main driver of ETH trading activity in July has been increased optimism around the Merge and an improvement of global risk sentiment. However, last week's selloff across markets confirms that ETH remains a higher beta play," Kaiko wrote. Read the full story here. |
ETH Merge Discussions Heat Up |
- Data tracked by analytics firm Santiment shows Ethereum's impending technological upgrade, dubbed "The Merge", is increasingly being mentioned on social media.
- Large spikes in social media mentions indicates retail investor euphoria, often observed at local price tops. Ether has come under pressure with social media seeing record interest in the topic.
- Interest is likely to remain high as we near the supposedly-bullish Merge, slated to happen in mid-September.
- "As we draw closer, it's very likely we see yet another spike in 'Merge' social dominance and similar price action (alts dropping, ETH rising) as late comers pile in whatever they have to ride it, which eventually increase the chance of things leading to a blow off top," Santiment said in the blog post published last week.
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The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours: |
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Biggest Gainers Biggest Losers |
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Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges. |
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Check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time. - Octavio Marenzi, CEO and founder, Opimas
- Katie Talati, head of research, Arca
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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