Weekly Market Rollup - 19/09/2022

In this Week's Market Rollup

Maybe the Merge was priced in? Despite the successful completion of Ethereum’s largest upgrade ever, the sugar high of The Merge proved short-lived, with ETH posting one of the largest losses (-20.2%) across the market over this past week. This negative price action carried across the market, dragging BTC and most altcoins down with it.

Market Highlights

• Ethereum successfully completed The Merge upgrade on September 15, transitioning the blockchain to an environmentally-friendly Proof-of-Stake (PoS) protocol.
• The ETH price failed to climb after The Merge and instead lost over 20% of its value over the last seven days, making it one of this week’s worst performers.
• The White House published its framework for the digital asset ecosystem, outlining its plan to develop a Central Bank Digital Currency (CBDC).

Price Movements

Bitcoin (BTC)

Bitcoin (BTC) started off the week strong, rallying to a high of US$22,799 on September 13. However, this rally was short-lived as a broader market sell-off saw BTC tumble 11.6% from its high the following day. The market-leader then sank further into the weekend, closing the week at US$19,814, down 8.4% over the last seven days.

Ethereum (ETH)

Despite the successful completion of The Merge upgrade on September 15, Ethereum (ETH) was amongst the worst performers across the top assets by market-cap over the past seven days. Anticipation of this major upgrade contributed to strong ETH price action to start the week, but completion of The Merge saw ETH dip a steep 6% within hours of the event. It then continued to fall post-merge, shedding over 20% of its value, closing the week at US$1,417.

Nevertheless, the significance of this milestone is not to be underestimated. Ethereum co-founder, Vitalik Buterin, shared his gratitude to those who worked on The Merge on Twitter after the successive blocks had been finalised.

With validators now securing the network through a stake of their ETH (as opposed to computer processing power), the energy consumed by the Ethereum network has plummeted. The upgrade may have even exceeded the Ethereum Foundation’s energy cut projection, with a report commissioned by the Crypto Carbon Ratings Institute (CCRI) revealing that Ethereum’s energy usage and carbon footprint has been reduced by 99.99%. The Ethereum Foundation provided context for this fall in energy consumption posting a chart comparing the annual energy consumption of major tech companies, shown below.

In contrast, crypto market intelligence firm, Santiment, has cautioned that this may have come as a trade-off to decentralisation, exclaiming that 46.15% of the PoS nodes (which validate transactions and add blocks to the chain) can be attributed to just two addresses: Coinbase and Lido Dao (LDO).

Altcoins

Falling BTC and ETH prices have brought the rest of the market down along with them over the past week, with only a handful of assets posting positive results. Following two weeks of positive price action, all sectors fell in value over the last seven days. GameFi led the pack, losing 18.42% in value. This was followed closely by DeFi falling 17.99%, Smart Contract Platforms by 14.35%, and Web3 by 13.7%.

Amongst the handful of assets to avoid such treatment were AirSwap (AST), which gained an impressive 41.6%, followed by Neblio (NEBL) up 19.8%, and lastly, Chiliz (CHZ) up 12.4%. AirSwap, launched in 2017, serves as an open-source DeFi protocol facilitating market-makers through a request-for-quote (RFQ) and last-look (LL) trading system. No major news regarding AirSwap has developed this week, but AST has rallied 66% over the last 30 days. Neblio is a PoS Layer-1 protocol that aims to rival Ethereum. It has performed well for the month, increasing by 210% over the last 30 days.

Investors who speculated on Ethereum PoW (ETHW) forks and mining alternatives have suffered this week. The original ETH fork, Ethereum Classic (ETC), fell over 25% this week, while Ravencoin (RVN) fell by 18.7%. Despite the bearish week, RVN remains up 42.1% over the last 30 days.

Web3 News

BigCommerce, a NASDAQ-listed e-commerce platform, has partnered with crypto providers BitPay and CoinPayments to enable merchants to accept BTC and other cryptocurrencies. The strategic move will widen BigCommerce’s marketshare, allow online shopping with BTC and other cryptocurrencies, and further validate crypto’s utility in the e-commerce space. BigCommerce’s partnership follows e-commerce giant Shopify, which expanded its crypto payment options by partnering with Crypto.com in May this year.

Regulatory

Six months since President Biden’s Executive Order on Ensuring Responsible Development of Digital Assets, the White House has released a “First-Ever Comprehensive Framework for Responsible Development of Digital Assets”. Similar to the Executive Order, the “Comprehensive Framework” does not lay down any new legislation, but it does provide a clearer framework for responsible digital asset development and paves the way for further action.

The framework was published on the White House official website on September 16 and consists of seven sections: (1) Protecting Consumers, Investors, and Businesses; (2) Promoting Access to Safe, Affordable Financial Services; (3) Fostering Financial Stability; (4) Advancing Responsible Innovation; (5) Reinforcing Our Global Financial Leadership and Competitiveness; (6) Fighting Illicit Finance; and (7) Exploring a U.S. Central Bank Digital Currency (CBDC).

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