Most
analysts have been trying to explain a recent cryptomarket rebound caused by an
upcoming upgrade of the Ethereum (ETH) network in September. Ethereum prices have
indeed risen ahead of any other top crypto asset. The founder of the Ethereum
network, Vitalik Buterin, is willing to move it to the new algorithm of Proof-of-Stake
instead of leaving it with Proof-of-Work.
Many long
positions were opened in July as Bitfinex registered 495,000 long positions by
the end of the month instead of 180,000 long positions at the beginning of it. In
light of the crypto rebound it is time to take profits as the number of long
positions dropped to 230,000. The same spike of opened long positions from
120,000 to 590,000 over the period of a few days was last seen in November 2021
when ETH surged to $4,500.
All this
happened amid a discussion about the new anti-inflationary model of the
Ethereum network that suggests the partial burning of the commissions within
the network. The amount of burned ETH decreased by 90% from its peak and was
hovering around $0.5-1.0 billion coins in recent weeks. The amount of burning
after an upgrade is suggested at $0.5-0.6 billion, which is lower than the
current burn. That would not allow the network to introduce the anti-inflationary
model. This model could be implemented once the activity within the network substantially
grows, and not only during a crypto rally. The most active ETH burning projects
are OpenSea (5,100 coins within the last 30 days) and Uniswap V3 (3,900 coins
for the same period).
Regarding
Bitcoin prices, the only source of information on its further movements remains
on the chart. The head-and-shoulders pattern has been formed, and any dive
below $23,200 would open downside opportunities for BTC to move to $19,000.
Such price movements have been registered after the release of a strong July
Non-Farm Payrolls report which did not provide good news for risky assets. The
decline of unemployment to 3.5% and the rise of average hourly earnings by 5.2%
may prompt the Federal Reserve (Fed) to act aggressively as it has failed to
tame inflation to the right degree. The tightening of monetary policy in the
United States would prompt other central bankers to raise interest rates
further as prices would continue to gallop amid a strong U.S. Dollar. Overall,
it would decrease the demand for risky assets, including cryptos. At least a few
years will be required to bring inflation under control and this will certainly
delay another crypto spring.