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London’s impact: Ethereum 2.0’s staking contract becomes largest ETH holder

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London’s impact: Ethereum 2.0’s staking contract becomes largest ETH holder

Recently, the Ethereum network reached a new staking milestone. On Aug. 17, the Ethereum 2.0 staking contract became the single largest holder of Ether (ETH), surpassing Wrapped Ether (WETH). According to data from Etherscan, the Eth2 deposit contract now holds over 7.14 million Ether tokens, valued at $23 billion at the time of writing.

This accounts for nearly 6.1% of all Ether tokens in circulation, which means that the staking rate for Ethereum is now over 6%. The Wrapped Ether deposit contract comes in second, holding 6.97 million tokens — i.e., 5.94% of all Ether. Data from Beaconcha.in reveals that there are now 217,354 validators on the Ethereum network.

Right away, this has made Ether the third most staked cryptocurrency. According to data from Staking Rewards, the Ethereum 2.0 deposit contract ranks third, just after Cardano and Solana, which have been proof-of-stake (PoS) blockchains since their inception. In contrast to the $23 billion in ETH staked, there is over $26 billion worth of SOL staked and $63 billion in ADA staked on their respective networks. 

Pete Humiston, manager of Kraken Intelligence — the research department of the Kraken exchange — told Cointelegraph about these different blockchains:

“Ether’s market cap is well over $350 billion: many multiples above both Solana and Cardano. SOL and ADA may well have a larger share staked compared to the 5.7% of ETH on ETH 2.0, but the sheer size of Ethereum means it is all but inevitable it will surpass both as ETH 2.0 continues apace.”

Ether staking only in nascent stage

Ether staking is already reaching milestones and is rising through the ranks, even though staking on the Ethereum network is still in its nascent stage. All the Ether currently deposited in the Eth2 deposit contract is locked and can be withdrawn only after the Beacon Chain merges into the main Ethereum network — the final stage of its transition to a PoS consensus mechanism. 

Rick Delaney, senior analyst at OKEx Insights — the research team at cryptocurrency exchange OKEx — spoke with Cointelegraph regarding whether the transition could end up being slowed down. He stated:

“A few factors are likely to slow uptake, including the requirement to lock capital on the Beacon Chain, centralized staking service risk, ETH’s more expansive DApp [decentralized application] ecosystem enabling additional opportunities to generate returns and the protocol risk accompanying any major network upgrade.”

This staking milestone for Ethereum comes on the heels of a major event in the transformation of the blockchain, the London hard fork. The London upgrade went live on the network on Aug. 5, bringing in the highly anticipated Ethereum Improvement Proposal (EIP) 1559, along with four other EIPs: EIP-3554, EIP-3541, EIP-3198 and EIP-3529.

EIP-1559 brought a change in the transaction pricing mechanism that eventually reduced the inflation rate of the token and decreased miners’ revenues from transaction fees. This upgrade is the penultimate step leading to the final merge of the Eth1 and Eth2 chains scheduled for 2022. 

Related: Ethereum’s London hard fork sets ETH on a more deflationary path

Humiston mentioned that the reduction in ETH’s inflation makes it a much more scarce asset than it would have been otherwise. The inflation schedule will change yet again once the final transformation to PoS takes place. He said:

“If the ETH burned offsets that issued under PoS, ETH will become a deflationary asset. Should demand stay at current levels, then we can assume that the price of ETH will likely rise, all else remaining constant.”

This price increase could lead to a positive feedback loop, as a higher price could give a push to innovation and development within the ecosystem, which would then lead to greater network usage and entail that even more ETH is burned under this EIP. In addition to the reduction in selling pressure on ETH over the short- to mid-term leading to higher ETH prices, there are other aspects that need to be considered.

Delaney pointed out that miners currently sell ETH to cover their electricity and hardware costs, but once the network is entirely secured by stakers, even the miners will be incentivized to hoard ETH. He said, “Meanwhile, network users’ ETH will disappear from circulation via 1559’s burn mechanism. While the resulting supply shock will likely send ETH to the proverbial moon, it may have a centralizing effect on the network’s validator structure and wealth concentration.”

CEO of on-chain analytics service CryptoQuant, Ki Young Ju, mentioned in a tweet that a sell-side “liquidity crisis” could push ETH past Bitcoin (BTC) in terms of price. Cointelegraph discussed this with Andrew Keys, founder of ConsenSys Capital and co-founder managing partner of Darma Capital, who acknowledged that while there will be a supply reduction, “to call it a ‘liquidity crisis’ might be overstating it.” He further stated:

“That reduction in the supply of the token, coupled with Ethereum’s greater scalability and its larger developer community should lead to the price of ETH eclipsing the price of BTC in the next 24 months.”

The flippening narrative

In the aftermath of the London upgrade, in addition to the increased interest witnessed in the Eth2 staking contract, the price of the token also has seen huge gains. In the past week, ETH has posted 10.58% gains and in the past month has posted 51.80% gains. This surpassed the 42% gains Bitcoin has over the last 30 days. 

This incremental difference in price appreciation has brought back the “flippening” narrative to the conscience of the cryptoverse. Nigel Green, CEO and founder of the deVere Group — one of the world’s largest independent financial consulting organizations — has stated that he expects ETH to continue to outperform BTC over the remainder of the year. He also mentioned that within the next five years, the value of Ether will exceed that of Bitcoin, adding, “Ethereum’s ascent to the top of the cryptoverse seems unstoppable.”

Coinbase’s second-quarter earnings release recently revealed that the volume of ETH traded on the platform has surpassed BTC for the first time in the nine years — since the inception of the platform. Even one of the most prominent cryptocurrency hardware wallets, Ledger, has announced the integration of an accessible staking option through Ledger Live, which could lead to higher retail levels of interest in staking on the network, thus feeding into the frenzy about Ethereum as a whole, a dynamic usually reserved for Bitcoin.

Delaney further spoke on the possibilities of a flippening event. He said, “Given their respective use cases today — BTC as a store of value and ETH being required to interact with smart contracts — it seems likely that ETH trading volume will eventually surpass BTC.” In addition to trading, DApp service consumers would need to purchase ETH to interact with them. This is a stark contrast, as most of the BTC supply still sits in cold storage. He added: 

“Efforts like the Lido integration with Ledger make staking Ethereum more attractive to those concerned about centralized staking service risks and fees, capital lockup requirements, technical barriers to entry and security. These factors, combined with the fact that users can stake less than the 32 ETH required to run an independent validating node, should see staking participation grow.”

The rise in total value locked (TVL) across decentralized finance (DeFi) apps and the nonfungible token (NFT) boom provide evidence of strong Ethereum usage. According to data from DappRadar, the TVL in DeFi spiked 19% from the pre-hard fork levels near $102 billion on Aug. 4 to currently standing at $122.6 billion. This usage could increase even more if the ongoing network transition successfully reduces the gas price and increases scalability as intended.

Related: Staking will eat proof-of-work for breakfast — Here’s why

Keys commented that Ethereum leads Bitcoin in every metric apart from market capitalization and trading volumes and that it’s only a matter of time before ETH surpasses BTC in those metrics too. He added, “The Ethereum ecosystem is the largest ecosystem supporting blockchain applications, with 95% of all blockchain-based applications built there.”

Whether ETH will flip BTC in the short term remains to be seen, but Ethereum 2.0 could trigger a renewed interest in the cryptocurrency industry as a whole, even from traditional financial markets. As revealed in a JPMorgan Chase report, Ethereum could take its staking yields to $20 billion by 2022 and to $40 billion by 2025. This is yet another encouraging sign that reinforces the sustained demand for Ethereum.

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BTC, ETH, XRP, ZEN, UNI, OMG, AXS — Technical Analysis Sept 28

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BTC, ETH, XRP, ZEN, UNI, OMG, AXS — Technical Analysis Sept 28

Bitcoin (BTC) was rejected by the $44,000 horizontal resistance area.

Ethereum (ETH) is following a descending resistance line and potentially trading inside a descending wedge.

XRP (XRP) is following a descending support line.

Horizen (ZEN) has broken down from an ascending support line.

Uniswap (UNI) has broken out from a descending wedge.

OMG Network (OMG) is following an ascending support line.

Axie Infinity (AXS) has broken out from a descending resistance line.

BTC

On Sept 27, BTC was rejected by the $44,000 resistance area and created a long upper wick (red icon). This is a bearish sign since the area had previously been acting as support, and the rejection now validates it as resistance.

Technical indicators in the daily time frame are bearish. Both the RSI and MACD are decreasing. The former is negative while the latter has just fallen below 50.

The next closest support area is found at $38,000.

ETH

ETH has been decreasing underneath a descending resistance line since Sept 3. Most recently, it was rejected by the line on Sept 16.

Due to the long lower wicks, the support line cannot be accurately determined. However, it’s possible that ETH is trading inside a descending wedge.

Despite the wedge normally being considered a bullish pattern, technical indicators are neutral. The RSI is right at the 50-line and the MACD is below 0, although it is increasing.

Therefore, the direction of the trend cannot be accurately determined at the current time.

XRP

XRP has been following a descending support line since Aug 17. So far, it has been validated multiple times, most recently on Sept 21. The final touch of the support line (green icon) also coincided with the 0.618 Fib retracement support level at $0.85.

Despite the fact that XRP is trading above a confluence of support levels, technical indicators are not bullish. The RSI is at the 50-line and the MACD is negative, even though it is moving upwards.

The closest support and resistance levels are found at $0.76 and $1.07 respectively.

ZEN

ZEN has been decreasing since Sept 15, after creating a double top pattern and a long upper wick. The pattern was also combined with a bearish divergence in the RSI.

Shortly after, it broke down from an ascending support line. The breakdown is supported by the MACD and RSI, which are both decreasing.

The closest support area is found at $53.

UNI

UNI has been decreasing since Sept 2. After the Sept 7 drop, it created a descending wedge, which led to a low of $17.73 on Sept 26.

However, UNI rebounded and broke out from the wedge. The breakout is supported by the increasing MACD and RSI.

The closest resistance area is found at $26.15, created by the 0.618 Fib retracement resistance levels.

If UNI is successful in moving above it, it may move toward new highs.

OMG

OMG has been following an ascending support line since July 20. However, since Sept 6, it has failed to break out above the $10.60 area, which is the 0.618 Fib retracement resistance level.

Despite the rejection, technical indicators are bullish. The RSI has generated a hidden bullish divergence and the MACD is positive.

Therefore, an eventual breakout would be likely. This could take OMG toward the $15.33 all-time high price.

AXS

AXS has been increasing since Sept 21 when it bounced at the $48.28 support area. The next day, it created a bullish engulfing candlestick and broke out from a descending resistance line.

Following this, it reclaimed the $63 horizontal area and validated it as support.

Both the MACD and RSI are increasing, supporting the continuation of the upward movement.

The next resistance area is found at the all-time highs of $94.50.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Bitcoin (BTC) Fails to Move Above $44,000 Resistance

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Bitcoin (BTC) Fails to Move Above $44,000 Resistance

Bitcoin (BTC) attempted to move upwards on Sept 27 but was rejected by the $44,000 resistance area.

While BTC is still trading inside the upper portion of a descending parallel channel, the price action is lacking bullish signals.

BTC gets rejected

On Sept 27, BTC made an attempt at moving above the $44,000 area but was promptly rejected (red icon). The area had acted as support in August and the beginning of September but turned to resistance after the breakdown on Sept 20. The rejection created an upper wick and a bearish candlestick. 

Besides trading below resistance, technical indicators for BTC have turned bearish as both the RSI and MACD are decreasing. The MACD has just crossed into negative territory while the RSI is below 50. 

If BTC were to continue moving downwards, the next closest support area would be found at $38,000.

Current channel

The six-hour chart shows a descending parallel channel, which usually contains corrective structures.

Currently, BTC is trading inside its upper portion. Furthermore, it’s trading just above the 0.5 Fib retracement support level.  

Despite being above a confluence of support levels, technical indicators are bearish/undecided. The MACD is negative and has lost its strength while the RSI has just fallen below 50.

The two-hour chart shows that BTC is following an ascending support line and has made three higher lows since Sept 21. While this can be seen as a bullish structure, the price action is not bullish. 

The previous resistance area at $43,000 that was expected to act as support did not. On the contrary, BTC fell right through it. Furthermore, both the MACD and RSI have turned bearish.

While there is very strong support at $41,500, created by the 0.786 Fib retracement support level and the ascending support line, the price action does not seem bullish.

Wave count

The most likely wave count still indicates that the decrease from Sept 7 to Sept 21 was part of an A-B-C corrective structure, in which waves A:C had an exact 1:1 ratio. This is also supported by the presence of the descending parallel channel.

However, the movement since the low does not seem impulsive, casting some doubt on the possibility of this being the correct count.

Alternative counts could see the movement as a flat A-B-C corrective structure (upper image), or in the more bearish case a 1/2-/1-2 wave structure (lower image). 

At the current time, the correct count cannot be determined.

For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Europe becomes largest crypto economy with over $1T in transactions — Chainalysis

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Europe becomes largest crypto economy with over $1T in transactions — Chainalysis

DeFi has become a major catalyst for Europe’s crypto economy. Large institutions have also upped their share of transactions significantly.

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Europe becomes largest crypto economy with over T in transactions — Chainalysis

The region of central, northern and western Europe, or CNWE, has emerged as the world’s most active cryptocurrency block, receiving over $1 trillion worth of digital assets over the past year, according to new research from blockchain analytics firm Chainalysis. 

The report, which was released Tuesday, found that the CNWE region accounted for 25% of global crypto activity between July 2020 and June 2021. The region witnessed a sharp uptick in transaction volume across all crypto sub-categories, especially decentralized finance, or DeFi.

Chainalysis describes crypto transactions as anything involving trade, investments and business dealings.

Europe has also become a hotbed for institutional investing, with transactions values in this category growing to $46.3 billion in June 2021 compared with just $1.4 billion in July 2020. Perhaps surprisingly, the United Kingdom is the single largest crypto economy in the region at $170 billion worth of transactions. Nearly half, or 49%, of the value was sent via DeFi protocols.

“The U.K.’s growth is driven mostly by growing institutional investment, based on the large-sized transfers driving most of its transaction volume,” Chainalysis senior content marketing manager Henry Updegrave told Cointelegraph. 

A secular bull market for Bitcoin (BTC), the growth of competing smart contract platforms and the arrival of decentralized finance all contributed to crypto’s massive rally during the study period. It comes as no surprise that CNWE’s crypto market activity peaked in May 2021 during the height of the bull market, which was one month removed from Bitcoin hitting $64,000.

Chainalysis’ data corroborates a growing body of evidence showing that large institutional investors have become a driving force within crypto. Wealth managers, family offices and other institutional players have poured billions of dollars into Bitcoin and Ether (ETH) investment products offered by Grayscale, CoinShares, 21Shares and others.

Related: Crypto asset manager Cobo raises $40M to launch DeFi-as-a-service

Beyond the advanced economies of Europe, Chainalysis research has documented the growing uptake of crypto in emerging markets. The Chainalylsis 2021 Global Crypto Adoption Index named Vietnam, India and Pakistan as the leading countries for adoption based on on-chain value received, retail transactions and peer-to-peer exchange trade volume.

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