Will Ether Price Drop After September’s “Merge”?

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Crypto in a snap

bitcoin BTCUSD,
+1.43%
Gained 6.9% over the past seven days to trade at around $24,139 as of Thursday, according to CoinDesk data. ether ETHUSD,
+3.22%
rose 16.9% to around $1,879 in seven days. Meme Token Dogecoin DOGEUSD,
+0.86%
surged 7.8%, while another dog-themed token, Shiba Inu SHIBUSD,
0.08,
5.4% added from seven days ago.

Crypto Metrics
Biggest Winners

Price

%7 days return

Celsius network

$2.36

102.9%

Flow

$3.22

73.6%

decree

$36.53

38.2%

Zcash

$80.54

30.7%

NEAR protocol

$5.89

30%

Source: CoinGecko as of August 11th

Biggest Loser

Price

%7 days return

Tenset

$2.77

-10.2%

DeFiChain

$0.98

-7.7%

LEO token

$4.79

-4.3%

ApeCoin

$7.11

-1.2%

Frax

$0.99

-0.9%

Source: CoinGecko as of August 11th

“Merge” is coming

As the much-anticipated Ethereum “merge” approaches, Ether’s cash and derivatives markets have seen increased activity.

The “merge” is an upgrade that will transform Ethereum from Proof-of-Work to Proof-of-Stake, a consensus mechanism that is much more energy efficient, paving the way for a cheaper and more productive blockchain. Tim Beiko, who organizes Ethereum Core Developer Calls, predicted in July that the “merge” would start the week of September 19th.

As the date approaches, ether has gained more market share, while bitcoin and stablecoins’ market share has declined, according to a note from Arcane Research on Tuesday.

Meanwhile, in late July, the open interests of ether options, which measure outstanding contracts, surpassed those of bitcoin for the first time in history. Ether options open interests recently hit their all-time high, while bitcoin options are still about 35% off their peak, according to data from Glassnode.

Eliézer Ndinga, Research Director at 21 Shares, said he expects greater volatility in Ether price as the “merge” approaches. “It could be on the top or on the bottom,” Ndinga said. “Again, it would depend on how successful the merger would be,” says Ndinga.

“In the options market, some people have expiration dates towards the end of September, which obviously suggests speculation,” Ndinga noted.

Some traders appear to be positioning themselves with the expectation that Ether price will rise in the merger and fall thereafter, according to Glassnode analysts.

“Both futures and options markets are in backwardation post-September, suggesting traders expect the merger to be a buy the rumor sell the news style event and have positioned themselves accordingly” , the analysts wrote in a note on Tuesday.

Ether’s three-month futures contracts traded below their spot price. “This means futures traders are pricing ETH at a discount post-merger,” Glassnode analysts said.

The backwardation could also be the result of some traders’ strategy of long ether in the spot market and shorting ether futures in preparation for the possibility of a hard fork, analysts at Arcane Research noted.

Late July, Ethereum miner Chandler Guo suggested to hard-fork the Ethereum blockchain and split the chain, with one still based on the proof-of-work consensus mechanism. After Ethereum goes into proof-of-stake mode, miners will become obsolete.

Hear from Mike Novogratz on the Festival of the best new ideas in the money on September 21st and 22nd in New York. Galaxy Digital CEO has ideas for navigating the crypto winter.

Coinbase under SEC review

Coinbase Global Inc. COIN,
-10.77%
said it has received investigative subpoenas and inquiries from the US Securities and Exchange Commission that indicate further potential Pressure on the crypto exchange after posting bigger-than-expected losses in the second quarter.

The crypto exchange said Tuesday it has received investigative subpoenas and inquiries from the SEC “regarding certain client programs, operations, and existing and proposed future products,” including its asset listing procedures, classification of certain exchange-traded assets, its staking programs, and its stablecoin and revenue-generating products, according to a quarterly registration.

Coinbase has reportedly been to a US investigation whether it was letting Americans illegally trade crypto that should have been registered as a security, according to a Bloomberg report in July.

In a letter to shareholders also released Tuesday, Coinbase said the SEC sent the company a voluntary request for information in May, including its listings and the listing process. but that the exchange does not yet know if this investigation will become a formal investigation. “We regularly receive formal and informal questions from regulators about our views on the development of the crypto economy, our products and our operations,” the company wrote in the shareholder letter.

Treasury Department sanctions Tornado Cash

The U.S. Treasury Department’s Office of Foreign Assets Control on Monday sanctioned Tornado Cash, which allows users to conduct private crypto transactions.

As a result, Tornado Cash’s ownership and interest in ownership will be frozen in the United States, the Treasury Department said in a statement Monday.

The platform has been used to launder more than $7 billion worth of cryptocurrencies since its inception in 2019.

Tornado Cash was also reportedly used to raise more than $96 million in the Harmony blockchain’s Horizon Bridge hack in June and over $7.8 million in the Nomad Bridge exploit earlier this month wash, the Treasury Department said.

Crypto companies, funds

shares of Coinbase Global Inc. fell 10.9% on Thursday to $83.90 and is down 5.6% over the past five trading sessions. Michael Saylors MicroStrategy inc
MSTR,
+0.35%
was down 0.5% on Thursday at $334.08, while shares are up 7.8% over the past five days.

mining company Riot Blockchain Inc. REVOLT,
+4.50%
Shares rose 3.7% to $9.44 on Thursday and are up 15.6% over the past five days. shares of Marathon Digital Holdings Inc.
MARA,
+5.07%
up 4.5% to $17.09, up 27.8% over the past five days. another miner, Ebang International Holdings Inc. ebony,
+3.93%
Shares rose 1.8% to $0.60 on Thursday, up 13% over the past five days.

Overstock.com Inc.
OSTK,
+2.92%‘s
Shares gained 3.5% to $30.95. Shares are up 8.9% over the five-session period.

shares of block inc
sq
-3.21%,
Formerly known as Square, down 3.3% to $85.88 and down 4.2% on the week. Tesla Inc. TSLA,
-2.62%
Shares fell 2.8% to $858.83, down 7.2% over the past five days.

PayPal Holdings Inc.
PYPL,
+0.20%
rose 0.1% to $99.05, contributing to a 2.1% gain over the five session stretch. Nvidia Corp.
NVDA,
-0.86%
Shares fell 1% to $179.82, down 6.7% over the past week.

Advanced Micro Devices Inc.
amd,
-0.94%
Shares fell 0.7% to $98.36 on Thursday, down 5.3% from five trading days ago.

Under crypto funds, ProShares Bitcoin Strategy ETF
BITO,
+2.60%
rose 2.1% to $14.92 on Thursday while it Short Bitcoin Strategy ETF
BITI,
-2.57%
fell 2.2% to $32.34. Valkyrie Bitcoin Strategy ETF
BTF,
+2.64%
rose 2.1% to $9.26 during VanEck Bitcoin Strategy ETF
xbtf,
+2.56%
was trading up 2.8% to $23.65.

Grayscale Bitcoin Trust
CONDITIONS,
+1.47%
rose 1.8% to $15.23.

Must read

https://www.marketwatch.com/story/will-ether-price-fall-after-the-merge-in-september-11660247972?rss=1&siteid=rss Will Ether Price Drop After September’s “Merge”?

Brian Lowry

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