Mining crypto

Crypto Market Cap Recovers $1 Trillion in Light of Ethereum Merge Updates

Ethereum is paving the way for double-digit gains for many major cryptos.

A price surge across the majority of cryptocurrencies has seen the total crypto market cap rise above US$1 trillion. As is often the case, Bitcoin and Ethereum led the way.

  • Bitcoin has formed a double top pattern, currently testing resistance at AUD 34,000 (US$24,000).
  • Ethereum outperformed much of the market with +20% gains over 48 hours. ETH hit a high of over 2,500 Australian dollars (1,750 US dollars), a price not seen in over a month.
  • Other notable performers include Bitcoin Cash, Ethereum Classic, Lido, and Uniswap, all of which are up +20% in the past 2 days.

The positive growth seen by ETH is likely attributed to development progress surrounding the upcoming merger. The Merge is a highly anticipated update in which Ethereum will converge its execution layer, or Mainnet, with its consensus layer known as the Beacon Chain.

The merger will eliminate resource-heavy proof-of-work (PoW) mining on the Ethereum blockchain and shift entirely to a proof-of-stake (PoS) consensus mechanism. The Merge upgrade aims to reduce power consumption by more than 99% and is expected to be completed as early as September.

So why now?
In preparation for the upgrade, Ethereum performed a number of “shadow forks”. This process involves copying data from the mainnet to a test environment to ensure a smooth transition on release day. Ethereum recently completed its 10th shadow fork, which reportedly went off without a hitch.

Shortly after, Tim Beiko of the Ethereum Foundation tweeted an expected timeline for the Goerli/Prater testnet merger, marking another milestone.

Ethereum: number of active addresses |  Source: glassnode |  Image: Researcher

Ethereum: number of active addresses | Source: glassnode | Image: Researcher

As a result of these development advances, the number of daily active Ethereum addresses skyrocketed to 1,062,036. A 48% increase from the previous all-time high.

While the merger and the growing number of daily active Ethereum addresses are positive signs for the Ethereum community, there are also a number of other coins and tokens that could be affected by these factors.

Classic Ethereum: A fork of the original Ethereum blockchain, Ethereum classic will remain a PoS network after the merger. The recent price action seen by Ethereum Classic may be the result of current ETH miners transitioning operations to ETC in preparation for the merger.

Increased attention has also been focused on Ethereum Classic after mining company AntPool proposed a $10 million investment to support continued ETC mining and help promote the network.

Uniswap: The token price of Uniswap is highly dependent on the Total Value Locked (TVL) in the exchange. The fact that there are a growing number of active daily users on the Ethereum blockchain shows that there is still confidence in the DeFi ecosystem and that a revival could be imminent.

If all goes according to plan in future Merge updates and the number of blockchain users continues to grow, it is likely that some of this money will flow back to DeFi and UNI holders will likely be among the first to reap the benefits.

CAD of the Lido: Lido is a crypto that stands to benefit directly from the merger. Lido is a DeFi platform that supports Ethereum staking via stETH.

While 32 ETH is required to stake directly on the Beacon chain, Lido allows users to pool their Ethereum balance which is then, by proxy, staked by Lido. If the quantity of stETH increases, it is likely that the price of LDO will follow.

Investors are clearly paying close attention to the merger and the price development so far has been positive. With more merger-related announcements to come and ETH closing in on its US$2,000 resistance zone, the next few months promise to be exciting.

Trying to control the markets? Cut through the noise with our overview of the best cryptos to buy right now, explore some strategies for how to trade cryptos, or see if there’s a better platform for you with our guide to the best crypto exchanges.

Disclaimer: Cryptocurrencies are speculative, complex and carry significant risks – they are highly volatile and susceptible to secondary activity. Performance is unpredictable and past performance is not indicative of future performance. Consider your own circumstances and seek advice before relying on this information. You should also check the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the websites of relevant regulators before making a decision. Finder, or the author, may have holdings in the discussed cryptocurrencies.

Billy Endres owns cryptocurrencies as of the date of publication.