Crypto Market

Crypto Market: Exchanges Are Preparing For The Merge

The decentralized world is seeing exciting advancements right now. In response to Tornado Cash sanctions, CoinCenter developed legal defenses, and a significant DAO vote released $74 million for the Uniswap ecosystem’s team and development funds. Exchanges are getting ready for the Merge, and following last week’s decline, Bitcoin (BTC) found it difficult to gain traction.

Top Market Trends of the Week

  • For stock trading, cryptocurrency investing, and currency exchange, Malaysia’s top investment bank will launch a “SuperApp” from AliPay developer ANT in 2023.
  • Beginning in Argentina, Mastercard and Binance teamed up to allow customers to use cryptocurrency in 90 million merchant locations.
  • The DAO Treasury overwhelmingly approved Uniswap’s request for $74 million to establish the Uniswap Foundation for team and developer grants.
  • On September 6th, the Bellatrix Upgrade will serve as the official start of the Ethereum Merge. With 1661 ETH expected to enter supply every day as part of the transition to PoS, there are presently over 13.3 million ETH staked on the Beacon Chain.
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Top 7-day Gainers

  • EVMOS +40.6%
  • EOS +15.0%
  • BIT +10.6%
  • DFI +7.6%
  • ATOM +6.3%

Top 7-day Losers

  • CEL -60.2%
  • FLOW -21.1%
  • FIL -18.6%
  • STEPN -17.5%
  • OKB -17.0%

Bitcoin’s Technical Summary

Last week turned surprisingly bearish for the crypto market as the fundamental factors we highlighted in the previous issue came into play. The turn to negative sentiment – as confirmed by a 16-point drop in the Crypto Fear and Greed index over the week – can be attributed to several triggers.

Firstly, the U.S. stock market came off several downbeat sessions as the recent bear market rally fizzled amid the again-rising macroeconomic uncertainty and a potentially more hawkish Fed. The tech-focused Nasdaq, S&P 500, and Dow all sank over last week, as the markets largely returned to the earlier in the summer’s more risk-averse environment.

Following the publication of the minutes from the Federal Open Market Committee (FOMC) meeting, which indicated that the Fed potentially aims to remain consistent with its 75 basis point interest rate hikes in September, Bitcoin (BTC) lost over 10% of its value over the past five days. Breaking its strong uptrend momentum, Bitcoin is now trading near the $21,000 zone.

As for this week, traders should keep their eyes on the PCE data release, as a more brutal sell-off may be awaiting the risk-on assets such as equities and crypto if the inflation numbers are higher than expected. Fed’s Powell speech at the Jackson Hole conference on Aug. 26 also has the potential to send the markets down – or higher, alongside the revised GDP data release.

Market Outperforms

The second contributing factor to the market downturn in crypto finds root in Ethereum (ETH), despite it being one of the major drivers for July’s rally. The general concerns over the Ethereum Merge paired with the rumors of Jump Trading dumping a large amount of ETH together resulted in a change of investor sentiment to negative.

The hot discussion over the network’s transaction censorship that comes on the heels of the Ethereum miner Ethermine’s decision not to process transactions from the now U.S. sanctioned Ethereum-based privacy tool Tornado Cash also added fuel to the fire.

Earlier this month, major DeFi applications such as Aave and Uniswap blacklisted the addresses related to Tornado Cash and disabled their services on the front level, while Circle restricted the movement of USDC funds based on sanction orders by the U.S. OFAC.

These decisions are challenging for the decentralized nature of DeFi, but transaction censorship on the network layer brings the discussion on decentralization to a whole new level.

The turn from euphoria to anxiety among investors resulted in a steep correction for ETH, which ends the week seeing losses of about 13%.

Markets Show No Signs of Recovery

During the past four weeks, BTC and the whole crypto market have been slowly recovering from a huge drawdown in June when BTC tested $18,000. In a week or two, Bitcoin’s 50-week simple moving average (SMA), which is now drifting downward, is expected to cross below the 100-week SMA, marking the first bearish crossover since February 2019.

Crypto futures’ open interest has been ranging between $29-$30 billion as the number of shorts has increased, with BTC’s price declining to $20,700. Market participants are still cautious about calling it a “bottom,” but we might see a bounce off the current levels as there is liquidity to be taken out on higher levels. Next week there might be some market volatility due to S&P hitting crucial resistance levels and a hawkish Fed.

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