Chung’s Weekly Digest (9/12)

Pre-Merge Rally

Bitcoin ($BTC) is leading the pack with an 11.8% gain from a week ago as the crypto market heats up to one of the most critical upgrades in the crypto space.

The Merge is set to take place on Sept. 15 around 5 a.m. UTC and will be monumental. Ethereum ($ETH), the second-largest crypto asset by market cap, will change from its current ProofofWork (PoW) to a ProofofStake (PoS) consensus protocol.

The Merge is highly anticipated because it removes some of the hurdles to adoption for institutions. These concerns are:

• The network’s ability to scale and the speed of transactions
• High consumption of energy and environmental concerns

The network becomes more decentralized and there will be a broader pool of validators. Anyone can now participate as a validator without the need to invest in the hardware required for mining.

Despite the renewed confidence in crypto assets following the recent rally, the prospect for risk assets remains bleak as the U.S. Federal Reserve (Fed) is still battling with inflation. August’s Consumer Price Index (CPI) will be released Tuesday and some profit-taking might take place.

Some market observers believe that the market bottom has formed but the road ahead appears bumpy as several key levels must first be breached before a trend reversal can be confirmed. One of the most crucial indicators is the 200-week moving average of $BTC which sits at $23,200.

Weekly Recap

• Russia to introduce a legal framework for cryptocurrencies.
• Binance identifies hackers from the recent KyberSwap exploit.
• Deloitte loses cybersquatting dispute to a crypto startup.
• U.S. Federal prosecutors asked for Binance’s internal records.
• Australian federal police form cryptocurrency unit.
• Binance.US supports The Merge with an Ethereum staking product.
• Binance prepares for an eventual fork and the distribution of forked tokens.
• Phenix Finance plans to launch multisig wallet service on Cronos Chain.
• Binance launches BAB, the first soulbound token on BNB Chain.
• BNB Chain announces testnet launch of zkBNB.
• Gensler calls on crypto companies to work with the SEC on compliance.
• Reserve Bank of India to work on CBDC pilot project.
• Jim Carrey drops secret NFT collection.

Market Sentiment

Bitcoin’s hash rate has hit another all-time high, making the network stronger and more resilient than ever. Hashrate is an important indicator that the network is alive, robust, and secure. It can also be seen as a vote of confidence for the network.

Bitcoin is primed for another macro uptrend as it draws closer to the halving event, which is expected to take place on March 1, 2024. Bitcoin’s halving event is usually the catalyst for significant price rallies. Institutions are now considering crypto assets as a viable asset class and will be prepared to allocate a certain portion of their reserves in this new asset class.

This trend will likely continue as the fear of dollar’s devaluation brought about by inflation is likely to be a major concern. Public companies such as MicroStrategy is leading the way with a very aggressive and bullish positioning.

Coins to Watch

• Ethereum ($ETH) - Ethereum will be completing its transition to PoS this week. The Merge is currently the theme for this week as interest in Ethereum is expected to spike.
• A further aside is expected as the crypto market is riding on the upward momentum that is spurred by The Merge.
• Volatility is expected after The Merge and traders will lock in their profit.
• The Sandbox ($SAND) - The metaverse theme is far from over. More brands will be looking at metaverse platforms such as The Sandbox to stamp their presence in the virtual world.
• Institutional interest has yet to spike for this metaverse theme. The previous market cycle is a mere glimpse of the potential upsides for this crypto asset.
• $SAND hit an all-time high of $8.40 in November 2021 with plenty of room for further upsides in the upcoming market cycle.

• Cardano ($ADA) - Traders will be speculating on coins such as $ADA for some upside potential as it heads into the most important upgrade in its history.
• The Vasil Hard Fork is a radical change that will bring about a permanent divergence from its current blockchain.
• Layer-one platforms such as Cardano play an important role in the smart contract ecosystem by providing an alternative to Ethereum.
• Cardano was launched in 2017 and has a track record and a thriving ecosystem.