First Mover Americas: Crypto Market Cap Falls Below $1 Trillion as Momentum Fades

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Bitcoin (BTC) and ether (ETH) gained ground slightly Tuesday as markets continued to stabilize following last week’s bloodbath. U.S. stock futures posted modest gains and bond prices edged up.

Over the last seven days, BTC is still down 10% and ETH by 12%. This has pushed the overall market capitalization to below the $1 trillion mark.

The one-day Heiken Aishi (average bar) candles called a reversal this week as the open/close spread is very tight.

Some analysts are expecting the upcoming Merge, a major milestone for the second-largest blockchain, Ethereum, to have a positive impact on the crypto market as a whole, while others are saying it will have little effect on price.

“A short-term rally towards $1.2 trillion is plausible, but I would expect the market to keep being range-bounded going into the Merge,” wrote David Scheuermann, analyst at Crypto Finance AG, in a market note.

Another indicator, bitcoin’s 200-week (200W) moving average multiple, a critical level of support used to determine an overall long-term market trend, is suddenly trending down.

The 200W moving average is a critical level of support used to determine an overall long-term market trend. The trendline measures the average price of BTC over the prior 200 weeks.

According to data from Kraken, BTC is trading at 0.9 times its 200-week moving average, which is down 0.3% week over week, now at $23,118.

At the current 200-week moving average, a 10 times to 15 times multiple (historical range) implies a price range of $231,188 to $346,782, according to a report from Kraken Insights.

In March 2021, the multiple hit a local high of 5.8x before entering into a downtrend.

In the news, crypto exchange Coinbase (COIN) faces a class action lawsuit over alleged lapses in security. Filed in a federal court in Georgia, the suit alleges the crypto exchange failed to secure users' accounts against theft and hacks, and seeks damages upwards of $5 million.

Andreessen Horowitz, months after it established a $4.5 billion crypto fund, the venture capital firm has said it sees the crypto-market slump as an investment opportunity. The company said crypto can shift power away from big internet companies in a report.

Also, CoinDesk’s Amitoj Singh was on the ground in Istanbul for Eurasia’s largest blockchain conference. You can read more about it here.

Ethereum Merge Drama Continues as Traders Pile Out, Then Back In

By Jimmy He

For the past month, crypto markets have been buffeted by speculation over the potential impact of Ethereum's coming Merge – a major milestone for the second-largest blockchain. A key question is how the shift to a proof-of-stake system, which is supposed to be faster and more energy-efficient than the current proof-of-work protocol, will affect prices for ether (ETH) and related digital assets.

And with the event now approaching, expected next month, the market narrative keeps twisting.

According to a weekly report from the data provider Kaiko, ether’s steep price plunge on Friday brought a swift decline in open interest on derivatives – contracts that traders used to make leveraged bets on the cryptocurrency’s future price. Many traders had their derivatives trades liquidated, or wiped out due to margin calls, according to Kaiko.

But on Monday, money flooded back into the ETH futures market, the data provider found.

“As the price dipped below $1,600, we observed a significant spike in open interest,” Kaiko wrote.

Ether perpetual funding rates

There’s also been plenty of movement in funding rates on ether perpetual contracts, which are similar to futures contracts on commodities but without expiration dates. The funding rates recovered to near-neutral levels after dipping alongside the token’s price.

“When combined with the spike in open interest we observed this morning, it seems these new positions in ETH futures are biased long and investors are bullish at these price levels,” Kaiko wrote.

Trading volumes flipped

Separately, ether’s share of the weekly, combined trading volume of ether and bitcoin hit 57%, the highest since 2018. This trading activity exceeded Ethereum’s previous peak of 55% during the May 2021 crypto sell-off.

“The main driver of ETH trading activity in July has been increased optimism around the Merge and an improvement of global risk sentiment. However, last week’s selloff across markets confirms that ETH remains a higher beta play,” Kaiko wrote.

Read the full story here.

ETH Merge Discussions Heat Up

By Omkar Godbole