Weekly Market Rollup - 01/08/22

In this Week's Market Rollup

Is the Merge priced in yet? Anticipation over Ethereum’s upcoming merge to Proof-of-Stake continues to drive positive sentiment, as markets enjoy another strong week. Speculators are again placing heavy bets on assets that may benefit from the update, with many altcoins making bull market price movements. Even Bitcoin has joined in on the fun, closing the month with its strongest performance in nearly a year.

Market Highlights

• Bitcoin (BTC) had its best month since October 2021, up 20.7% at the end of July.
• Ethereum’s merge to Proof-of-Stake (PoS) remains on track as the final testnet merge is set to deploy next week.
• Crypto exchange Zipmex has filed for bankruptcy protection after freezing all withdrawals last week.

Crypto Market Overview

• The total cryptocurrency market cap closed the month at US$1.48 trillion, rising by approximately 22.4% in July.
• ETH recovered 6.6% of its relative market share against BTC, where the proportional market share of ETH compared to BTC now trades at 0.072 (1 ETH = 0.072 BTC).

Price Movements

Bitcoin (BTC)

Bitcoin (BTC) has continued its uptrend from last week, closing the month up 20.7% at US$23,831, making July 2022 BTC’s best performing month since October 2021. Despite this strong performance, BTC has failed to hold above US$24,000 for the second week in a row, potentially forming a new key level of resistance at this price level.

Despite last week’s downward mining difficulty adjustment of 5.4%, the largest since the Chinese mining ban, Bitcoin’s hash rate (total computation power) has begun to rise again, up 6.7% this week alone. An increased hash rate indicates more computational power; meaning, more miners are validating transactions, further securing the network and lowering the risk of attacks.

The Brazilian subsidiary of the Spanish Santander Group, Banco Santander S.A., reported this week that it will begin offering trading services for Bitcoin and other cryptocurrencies. This follows Brazil’s largest bank, Nubank, offering BTC and ETH trading services in May 2022. Nubank has since since acquired an additional 1,000,000 users in the last two months.

Ethereum (ETH)

As Ethereum’s highly anticipated transition to Proof-of-Stake, the Merge, remains on track to implemented this September, the price of its underlying token, ETH, continues to rally. Despite falling to a low of US$1,367 on July 27, ETH has successfully shot through its US$1,600 resistance level and has since traded above US$1,700. ETH closed the week at US$1,718, up 5.5% for the week and an impressive 58.1% for the month.

The Merge is one step closer to completion after the Ethereum Foundation announced that the final testnet (Goerli) merge will take place next week. The Merge will transition Ethereum from the energy-intensive Proof-of-Work consensus mechanism to Proof-of-Stake.

The most popular web wallet used with Ethereum, Metamask, released a new update which will present users with a large prompt detailing what permissions are being granted when connecting to decentralised apps (dApps.) This update follows a string of social media scams involving dApps and aims to protect users from unknowingly granting malicious dApps complete access to their wallets. Major NFT collections “Azuki” and BAYC’s “Otherside” have been recent victims to these scams, losing their investors millions of dollars in value.

Altcoins

The Web3 cryptocurrencies sector has been the strongest performing sector over the last week. Web3 assets have returned 27% on average during this period. These high returns have largely been driven by Filecoin (FIL) which increased by 95% over the last week. Around 150,000 (approx. US$1,635,000) units of FIL short positions were liquidated between July 30, 2022 and July 31, 2022. This mass liquidation likely played a role in FIL’s upwards price movement. Chainlink (LINK), Basic Attention Token (BAT), and Theta (THETA) also posted positive returns this week, increasing by 15%, 12%, and 10% respectively.

The Merge has continued to drive strong altcoin returns, with Lido DAO (LDO), the largest provider of liquid staking, continuing to perform well, up another 36% this week. LDO increased by 410% in July and was one of the strongest performers of the month. Elsewhere, Ethereum Classic (ETC) increased by 44% this month. Speculators have allocated heavily into ETC, betting that Ethereum’s transition to Proof of Stake (PoS) will result in Ethereum miners transitioning across to the Ethereum Classic network. The increase in ETC’s price has made mining ETC more profitable, encouraging more miners to verify transactions and solve blocks on the network. The computational power allocated to mining ETC has increased almost 25% in the last week, from 23.97 TH/s to 29.69 TH/s.

Regulation

On July 29, the Southeast Asia-focused cryptocurrency exchange, Zipmex filed for bankruptcy protection in Singapore, marking the latest victim of the global downturn in crypto. Zipmex suspended withdrawals for a week from July 20, stating that it was working to address its exposure of US$53 million to crypto lenders, Babel Finance and Celsius.

Recommended reading: Ethereum: What is The Merge?