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Good morning, and welcome to First Mover. I'm Brad Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is at the NEAR protocol's conference in Lisbon.) In today's newsletter: - Price Point: The clock is ticking toward Ethereum's shift to a more energy-efficient system, known as the "Merge." The landmark transition is now expected Wednesday, but the price of the ether was lower Monday in digital-asset markets. Bitcoin, by contrast, rose above $22K, the highest since mid-August.
- Market Moves: There's a lot of hoopla surrounding the Ethereum Merge. But the price of ether can't seem to break away from bitcoin, Omkar Godbole reports. The ratio between the two prices has topped out around 0.08 multiple times since May 2018.
- Chart of the Day: Historically, during monetary-policy cycles, prices for risky assets haven't rallied until after the Federal Reserve's first cut.
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It's a big week for the crypto industry as digital-asset traders await the Ethereum blockchain's landmark Merge expected later this week – a potentially historic shift to a "proof-of-stake" system that's supposed to be 99% more energy efficient than the current "proof-of-work" system that Bitcoin uses. Key questions include whether the new technology will work as intended, and also what the impact might be from a potential revolt or "fork" by crypto miners who have their livelihoods and equipment invested in proof-of-work. It's such a big deal that Google has added a countdown clock. (That suggests the switchover – a function of the speed and timing of the current blockchain – will happen on Wednesday.) "You are going to see a lot of people coming out of the woodwork and trying to do something around this major event that is happening now in order for them to capitalize somehow and push an agenda or push a particular fork that comes out of this," Anthony Di Iorio, one of Ethereum's co-founders, told CoinDesk TV's "First Mover" on Friday. The price of ether (ETH), the Ethereum blockchain's native cryptocurrency, was down 0.9% over the past 24 hours to $1,755. Bitcoin (BTC), for its part, could be due for fresh price volatility as the U.S. government releases its monthly consumer price index, a key gauge of inflation. The report is expected to show the rate of price increases in August slowed from July's elevated rate, reflecting softness in the prices for gasoline, airfares, hotels and used cars, though food prices were higher. As reported on Friday by Jocelyn Yang, bitcoin has recently been trading more closely in sync with the Standard & Poor's 500 Index of large U.S. stocks. The largest cryptocurrency was up 3.1% over the past 24 hours to about $22,311, its highest price since Aug. 19. CoinDesk Market Index The CoinDesk Market Index, a broad composite of 148 digital assets unveiled last week, was up 1.2%, led by Ribbon Finance's RBN token and Solana's SOL. Losers included two of last week's biggest pumpers, Terra's LUNA and the retired-but-still-trading luna classic, or LUNC. Near Protocol (NEAR) tokens also rose as First Mover lead writer Lyllah Ledesma broke the news that code overseer Near Foundation announced a $100 million ecosystem fund on Monday. In traditional markets, U.S. stock futures were higher, and the U.S. dollar index fell for a second day. The speculation is that a slowdown in inflation would relieve pressure prices for risky assets, because central banks might be able to ease up their aggressive campaigns to tighten monetary policy. |
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Ether Lags Bitcoin As Ethereum Merge Nears. Here's Why |
With the U.S. dollar restrained and Ethereum's supposedly-bullish upgrade, the Merge, almost here, stars seem aligned in favor of ether (ETH). And yet, the native token of Ethereum's blockchain has been underperforming bitcoin (BTC) since Friday. While bitcoin has rallied 15% to $22,300 since Friday, ether has lagged, gaining just 7% to $1,750, according to CoinDesk data. Ether's underperformance stems from traders rotating money out of ETH and into BTC, some observers told CoinDesk. In contrast, others blamed caution ahead of the Merge and increased interest in buying staked ether (stETH) token for ether lagging bitcoin. "With the ETH/BTC ratio trading back to previous highs, some have started to unwind their long ETH/short BTC trade and this has caused a +10% rally in BTC. Beta adjusted, bitcoin has outperformed ether during the last week," Markus Thielen, chief investment officer at British Virgin Islands-based IDEG Asset Management (IDEG), said in an email. |
Chart shows ether's price versus bitcoin in recent years has struggled to break out to a new level. (TradingView/CoinDesk) |
The ETH/BTC ratio topped 0.085 on Sept. 7, the highest since December, amounting to a 73% rally from July lows as traders piled into ether ahead of the long-awaited Merge. However, the momentum has weakened since then, perhaps with traders lightening their ETH long and BTC short positions. That typically happens when an asset runs into key resistance after a strong rally. The level of 0.08 has capped upside multiple times since May 2018. Lewis Harland, a researcher at Decentral Park Capital, made a similar observation, citing a rebound in bitcoin's dominance rate from long-held support as a catalyst for the movement of money out of ETH and into BTC. "With Bitcoin dominance at 39% and its chart showing a bullish RSI divergence, traders seem to be moving money from BTC to ETH," Harland said. "39% has been the BTC dominance floor since 2021." Read the full story here. |
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Risk Assets Likely to bottom After First Fed Rate Cut, Past Data Shows |
Chart shows past instances where markets rallied shortly after the Federal Reserve made its first rate cut in the monetary-policy cycle. (Bank of America) |
- Bitcoin jumped nearly 10% last week, registering its best performance since March.
- But it may be too early to say the cryptocurrency has bottomed out, as historically, U.S. equity markets have turned higher after the first Fed rate cut.
- Bitcoin tends to move in line with stocks.
- Strategists at ING expect the Fed to cut rates in June 2023.
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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 Market Index is a broad-market index of digital assets, weighted by market capitalization. A full description of the methodology is here. |
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- Bank of America Says the Ethereum Blockchain's Upgrade May Lead to Greater Institutional Adoption of Ether: Investors who are barred from buying tokens that run on proof-of-work systems may be able to buy ether after the blockchain switches to proof-of-stake, the bank said.
- Digital Asset-Focused Bank Protego Trust Names Ron Totaro as CEO
Protego added Bitfury's CEO to its board of directors in February. - Ethereum's Transition to PoS Could Push PoW By The 'Wayside', Ethereum Co-founder Says
Anthony Di lorio, one of Ethereum's founders, highlighted the time and effort that the Ethereum Foundation has invested in the change.
- Analysts Warn of Headwinds as Cryptos Gain Ahead of CPI Data; Luna Classic Pares Rally
U.S. inflation data for August will be released Tuesday, and some economists expect it to show that price growth slowed for a second straight month.
- NEAR Blockchain Moves Ahead with Phase One of Sharding Upgrade
As a part of NEAR's four-step plan to shard the network over the next year, the protocol will introduce 200 new validators.
- NEAR Protocol Forms Working Group to Promote DeFi Governance
The NEAR Digital Collective is a self-governance initiative aimed at further decentralizing the NEAR ecosystem's decision-making by moving it onto the blockchain.
- Hodlnaut Judicial Managers Weigh Unwinding Crypto Lender's Assets Before Ethereum Merge
The court-appointed managers of Hodlnaut in Singapore say they're concerned about incorrect pricing being relayed to smart contracts after the blockchain's upgrade.
- A Bitcoin ETF Is Long Past Due, Crypto Lobbyists Say in New Report
The industry is baring its teeth in a long-fought battle over spot exchange-traded funds, getting set to issue a report critical of how the regulator has handled itself. - Blockchain Supporter NEAR Unveils $100M VC Fund Targeting Web3 Culture and Entertainment
The NEAR Foundation is collaborating with Caerus Ventures in the initiative, which will make seed round investments. - India's ED 'Unfreezes' Bank Account of Crypto Exchange WazirX
The account was frozen in relation to the "illegal loan apps" scam investigation, which has come under the national spotlight. - Algorand Foundation Declares $35M Exposure to Troubled Crypto Lender Hodlnaut
Hodlnaut was placed under Interim Judicial Management after suspending withdrawals from its platform in August. - The Conservative Party of Canada Elects Pro-Bitcoin Leader Pierre Poilievre as Party Head
Pierre Poilievre won the leadership race by a landslide and plans to make Canada the "blockchain capital of the world." - Who Can Say Who Is Not Satoshi? Hodlonaut and Wright Go to Trial to Find Out
Wright is suing Twitter influencer Hodlonaut over a series of tweets in 2019 in which Hodlonaut called Wright a fraud and a scammer.
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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. - Lex Sokolin, head economist, ConsenSys
- Perianne Boring, founder and president, The Chamber of Digital Commerce
- Chika Uwazie, co-founder, Afropolitan
- Georgia Quinn, general counsel, Anchorage Digital
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Which institutes are most impacting the blockchain world? Tell us your thoughts in a five-minute survey. We're welcoming responses until Sept. 7. Take the survey here. |
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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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Countdown's On for Ethereum Merge, but Price is Slipping Versus Bitcoin