Weekly Market Rollup - 05/09/2022

In this Week's Market Rollup

Crypto markets have gotten off to a modest start for the month of September. Following two weeks of painful market conditions, we have enjoyed a brief relief rally over the past seven days with major assets and all market sectors showing positive performance. With anticipation for the Ethereum Merge building, September is set to be an interesting and historic month.

Market Highlights

• Crypto’s two largest assets, BTC and ETH, have trended in different directions over the past 7 days, with ETH outperforming BTC and regaining over 6% of its market share.
• ETH miner balances reached a four-year high of 260,000 ETH, as miners continue to accumulate ETH (rather than sell it) in anticipation of The Merge.
• Bankrupt crypto lender Celsius announced a court filing seeking to return US$50 million in assets to clients, which sent its CEL token rallying over 50%.

Price Movements

Bitcoin (BTC)

Since the Fed’s announcement last week to continue to raise interest rates, Bitcoin’s (BTC) price has remained range-bound, trading between US$19,500 and US$20,500. Following an uneventful previous 7 days, BTC closed the week up 1.1% at US$19,880.

Bitcoin miners are facing greater challenges to their business model as the mining difficulty for the world’s leading cryptocurrency surged by 9.26% over the last two weeks, according to data from BTC.com. This significant increase, which is the second largest difficulty spike this year, in addition to BTC’s poor performance, places extra burden on miners to meet running costs, reducing their profits.

In other news, a BTC whale wallet which was created in late-December 2013 moved just over 10,000 BTC (worth US$199 million at the time of writing) on August 29. The wallet which once held 134,000 BTC had its remaining 10,000 BTC transferred to multiple wallets in smaller batches with data suggesting a link to the 2011 Mt Gox hack.

Ethereum (ETH)

After shedding over 8% in value over the last two weeks, Ethereum (ETH) has reclaimed returns with some strong performance over the past 7 days. ETH climbed 8.42% this week, closing the week at US$1,560 and simultaneously making up lost ground against BTC, regaining 6.18% of its market share.

Interestingly, ETH miner balances have reached a four-year high, exceeding 260,000 ETH for the first time since April 2018. With energy usage expected to fall by 99.95% post-Merge, miners are accumulating ETH rather than selling to pay for running costs. These miners may also be speculating on a PoW fork which may occur after the Merge, choosing to support it.

Altcoins

With ETH showing strong performance over the past 7 days, altcoins have also enjoyed a relief rally. For the first time in over two weeks, crypto market sectors have all posted positive returns. DeFi has led the pack returning 11.56%, being closely followed by Smart Contract Platforms and GameFi, returning 10.67% and 6.03% respectively.

CEL was the notable winner this week, soaring 50% after the bankrupt crypto lender Celsius filed a motion with the Bankruptcy Court, aiming to return US$50 million worth of assets back to its clients. With the Merge narrative continuing to build, investors have allocated heavily into market-leading DeFi protocols that may potentially benefit from the Ethereum upgrade to PoS. Lido DAO (LDO) rallied 25.3%, while AAVE (AAVE) surged 12.5% over the past 7 days.

Amongst the top performers across Smart Contract Platforms were Cardano (ADA) and Near Protocol (NEAR). ADA responded positively to last week’s successful Vasil hard fork, rallying 15.5% in the days that followed, while NEAR also enjoyed double digit growth, climbing 12.5%.

Web3 News

With The Merge fast approaching, Ethereum co-founder, Vitalik Buterin, has urged node operators to update their clients for the Bellatrix upgrade set to take place on September 6. The upgrade will entail a hard fork of the beacon chain in preparation for the second upgrade, Paris, which will transition the consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS). The Paris upgrade remains on schedule to take place between September 10 to September 20.

As the date for the Ethereum Merge draws nearer, non-fungible token (NFT) marketplace OpenSea has announced that it will only be supporting NFTs on the upgraded proof-of-stake (PoS) blockchain post-Merge. This announcement was expected, as many other Ethereum-based projects have expressed their support for the Ethereum mainnet's PoS transition.

Despite bearish crypto market conditions, mainstream adoption of NFTs has continued. Luxury brand Hermès is laying the foundation for its entry into Web3 by filing a trademark application covering NFTs, cryptocurrencies, and the Metaverse. The trademark application comes months after NFT project MetaBirkins was sued for allegedly using its Birkin brand to sell digital collectibles.

In addition to this, Flow (FLOW), a smart contract platform by Dapper Labs, has announced that Ticketmaster Event Organisers can now offer NFT tickets minted on Flow’s blockchain. Other than being used as proof-of-attendance at notable concerts, the main purpose of the NFT tickets will be for commemorative value.

Recommended reading: The Merge is Coming: Everything You Need to Know