As Bitcoin Falls Below $19,000, Cryptocurrencies Look to Ethereum ‘Merger’

The long-awaited Ethereum “merger” is due to go live next week, but even that may not be enough to stop the bleeding from bitcoin and the rest of the crypto market.

Bitcoin crashes the cryptocurrency market.

Traditionally, in the cryptocurrency market, the beginning of September was not easy for bitcoins and all other cryptocurrencies.

BTC (Source: CoinGecko)

The world’s leading cryptocurrency extended its losing streak for several weeks, falling below $19,000 for the first time since the liquidity crisis in the cryptocurrency market in June. Bitcoin is trading at around $18,730 today, down 5.8% on the day. It is currently over 70% of its November 2021 peak.

The latest bitcoin crash hit stocks like Ethereum, BNB, Cardano, and Solana even harder, leading to an overall market downturn, bringing the global crypto market capitalization below $1 trillion.

Following the explosion of Three Arrows Capital and the subsequent collapse of crypto lenders such as Celsius and Voyager Digital, the crypto market showed signs of recovery over the summer. Ethereum and other assets jumped more than 100% from their June low, helped in part by slowing inflation and relatively conservative Federal Reserve measures, but the market’s bullish momentum came into question in mid-August when Bitcoin failed to break. over $25,000. (On Aug. 26, Crypto and other asset classes were hit hard after Fed Chairman Jerome Powell warned of further “sickness” for the markets in a Jackson Hole speech. He reiterated that the US central bank hopes to bring inflation down to 2%.)

Can a merger save the market?

September has historically been a weak month for cryptocurrencies, and last week the market continued to decline at the end of the summer. Over the past few weeks, traders have been looking at Ethereum’s upcoming “merger” with Proof-of-Stake as a possible catalyst for a rally, helping Ethereum and other related assets such as Lido and Ethereum Classic rally. Considered one of the biggest crypto events in recent years, the merge began on Tuesday with the successful activation of the Ethereum Bellatrix upgrade, while the main event is expected to take place in about a week. However, with the fall of Bitcoin, Ethereum and other assets have been hit hard. Despite the summer period, ETH is currently trading at $1,508, about 69% below its all-time high.

Since Bitcoin makes up about 36.5% of the total cryptocurrency market capitalization, crypto enthusiasts hope that interest in this cryptocurrency will return, as it did with Ethereum in the summer.

The merger is expected to improve Ethereum’s energy efficiency by 99.99% and reduce ETH issuance by 90%, but these changes will not have a direct impact on Bitcoin. In fact, Ethereum Proof-of-Stake is likely to expose Bitcoin’s dependence on the very energy-intensive Proof-of-Work consensus mechanism that Elon Musk and several major institutional players have listed as a concern in 2021. Ethereum has been losing ground in recent weeks, prompting the main proponents of the second cryptocurrency to call for a “coup,” in which Ethereum’s market cap exceeds Bitcoin’s.

Rising hopes can wait a while, however, while Ethereum fundamentals have never looked stronger, ETH has rarely come unscathed from BTC’s biggest crashes in the past. With nearly a year of cryptocurrency bear market and ongoing macroeconomic concerns such as interest rate hikes and Europe’s energy crisis still scaring investors, it’s hard to imagine how the market will ever turn around and rise steadily over the next few months. The latest crash proves that even the biggest crypto event in recent years may not be enough to instill confidence in active followers in the field.

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