The recent Bitcoin rebound from its monthly lows should not be overestimated. The price history of the BTC has shown similar spikes that were then followed by a price fall. The level of $21,900 was insistently attacked by bulls up until August 27. But this attack was unsuccessful, and the price rolled back below $19,000. Now bulls have returned to the lower levels to attempt to push prices above this resistance level once more.
However, their chances to succeed this time are limited as the current price recovery is seen to be moving along the weak “upside wedge” pattern that is clearly pointing to an unstable situation and a possible rapid deterioration of prices. There are no reasons for a continuous rally as investors are not inclined to deal with such risky assets amid global monetary tightening and uncertainty.
High volatility in the crypto market is also linked to an upcoming Ethereum protocol upgrade to the Proof-of Stake (PoS) algorithm. The same situation was recorded in 2017 amid a Bitcoin hard fork that led to Bitcoin Cash and some other projects that had pure speculative reasons behind them. The current Proof-of-Work (PoW) algorithm of Ethereum is still being widely debated by the miners’ community but has low chances of sustaining its status as a primary version of Ethereum blockchain. Developers and crypto enthusiasts are likely to follow the example of the iconic Vitalik Buterin, the founder of Ethereum, and continue his vision of Ethereum and network development. No doubt, the PoW model is considered safer to operate, but the miners’ community is paying more attention to the income side of the PoW algorithm. In particular, the first move of PoW developers was to embed within the ETH code the rule that direct transfers of commissions would be made to the miners’ wallets.
There are more specific reasons for this, like the launch date of the new coin is set fora few days after the upgrade of the Ethereum network, meaning that the blockchain should not work over this period, while in reality the blockchain should function without any interruptions. It seems this time “separatists” are less prepared than in 2016 when Ethereum Classic (ETC) emerged. That project is not even near the original ETH coin with the market cap at around 3%t, and no life existing on the ETC platform.
The infamous LUNA token was pumped by 500% after the developers’ proposal of taxing every transaction by 1.2% to create deflationary pressure. But in order to do so, crypto exchanges that are the main drivers of coin circulation, have to cooperate to collect these taxes. But they are seemingly not willing to cooperate after the world’s largest crypto exchange Binance refused to change its trading regime. With this in mind the daily burn amount of the coin is expected to be only around $55,000, while the daily minting amount is at $200,000.