As Bitcoin Loses $19,000, Crypto Hopes Pin on Ethereum Merger

Key points to remember

  • Bitcoin slipped below $19,000 for the first time since June.
  • The cryptocurrency market has looked tough for weeks despite a relief rally over the summer.
  • Crypto traders and investors are anticipating Ethereum’s next “Merge” event, but it may not have the immediate impact people were hoping for.

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The highly anticipated Ethereum “merger” is set to ship next week, but even that might not be enough to stop Bitcoin and the rest of the crypto market from bleeding.

Bitcoin brings down the crypto market

As is tradition in the crypto market, September got off to a rocky start for Bitcoin and its younger siblings.

BTC/USD (Source: CoinGecko)

The world’s top cryptocurrency extended its losing streak by a week on Wednesday, falling below $19,000 for the first time since the crypto market’s liquidity crunch in June. According to data from CoinGecko, Bitcoin is trading at around $18,730 at press time, down 5.8% on the day. It is currently over 70% of its November 2021 peak.

Bitcoin’s latest selloff has hit companies like Ethereum, BNB, Cardano, and Solana even harder, leading to a market-wide slowdown that has taken the cryptocurrency’s global market capitalization below $1 trillion. .

After the explosion of Three Arrows Capital and the subsequent collapse of crypto lenders like Celsius and Voyager Digital, the crypto market showed signs of recovery over the summer. Ethereum and other assets jumped more than 100% from the June low, helped in part by slowing inflation rates and relatively conservative moves by the Federal Reserve, but the market’s bullish momentum was questioned in mid-August when Bitcoin failed to break above $25,000 (Crypto and other asset classes were hit hard on August 26 after Fed Chairman Jerome Powell warned of further “pain” for markets in a speech in Jackson Hole; he reiterated that the US central bank hopes to bring inflation back to 2%.)

Can the merger save the market?

September has always been a weak month for crypto prices, and the past week has seen the market extend its late summer slump. Over the past few weeks, traders have been looking to Ethereum’s upcoming Proof-of-Stake “merger” as a possible catalyst for a recovery, helping Ethereum and other related assets like Lido and Ethereum Classic to soar. . Billed as one of the biggest crypto events in recent years, the merger kicked off in earnest on Tuesday with the successful activation of Ethereum’s Bellatrix upgrade, while the main event is expected to ship in about a week. . Yet, with Bitcoin down, Ethereum and other assets have taken a big hit. Despite its summer run, ETH is trading at $1,508 at press time, around 69% below its all-time high.

While there is still time for the meltdown narrative to revive the market, with Bitcoin accounting for around 36.5% of the total cryptocurrency market capitalization, crypto devotees are hoping that interest in the top crypto will return as it did for Ethereum over the summer.

The merger is expected to improve Ethereum’s energy efficiency by 99.99% and reduce ETH issuance by 90%, but these changes will not directly impact Bitcoin. In fact, an Ethereum proof-of-stake is likely to expose Bitcoin’s reliance on a power-intensive proof-of-work consensus mechanism, which Elon Musk and several major institutional players have highlighted as a concern in 2021. Bitcoin has lost ground to Ethereum in recent weeks, leading leading proponents of the second crypto to call for a “turnaround” in which Ethereum’s market capitalization exceeds that of Bitcoin.

‘Returning’ hopefuls could wait a while, thoughwhile Ethereum’s fundamentals have never looked stronger, ETH has rarely emerged unscathed from BTC’s biggest crashes in the past. With crypto now nearly a year into a bear market and lingering macro fears such as interest rate hikes and the European energy crisis still spooking investors, it’s hard to see how the market will turn bullish for an extended period of time. over the coming months. The latest selloff proves that even the biggest crypto event in years may not be enough to instill confidence in famous ardent believers in the space.

Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.

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