Ethereum completes London hard fork, gains surpass Bitcoin

Ether (ETH), the second-largest cryptocurrency by market cap, was in the spotlight on Thursday as the upgrade known as the London Hard Fork was officially activated on the Ethereum blockchain network. The upgrade has boosted prices, with Ether up about 5% in the past 24 hours, compared to Bitcoin's 3% gain in the same period.

Despite the ether rally, some analysts expect widespread institutional adoption to take several years. Institutional interest has boosted bitcoin’s investment appeal over the past year, contributing to the cryptocurrency’s rally in the fourth quarter of 2020.

“I think Ethereum’s market cap may surpass Bitcoin in the long term, but not this year,” Ki Young Ju, CEO of CryptoQuant, said in an interview with WuBlockchain.

“I met with Goldman Sachs, Fidelity and other large institutional asset managers in Miami a few weeks ago and they said they were still struggling to explain what Ethereum/DeFi (decentralized finance) is to their bosses,” Ju said.

Latest Price

Cryptocurrency

Bitcoin (BTC): $41,143, +2.83

Ether (ETH): $2,806.8, +4.11%

Traditional Market

S&P 500: 4429, +0.6

Gold: $1,814.2, +0.21

The 10-year Treasury yield closed at 1.217%, compared with 1.16% on Wednesday.

Meanwhile, some institutions remain active in the overall cryptocurrency market, either directly or indirectly. On July 22, Fidelity Investments acquired a 7.4% stake in cryptocurrency miner Marathon Digital Holdings for approximately $20 million.

French asset manager Melanion Capital won regulatory approval on Thursday to launch an exchange-traded fund (ETF) that tracks the price of bitcoin and several cryptocurrency-related stocks.

Also on Thursday, U.S.-based asset manager Invesco filed an application with the U.S. Securities and Exchange Commission (SEC) to list an ETF, seeking to gain indirect exposure to Bitcoin through futures and other investment vehicles.

Large institutions are slowly entering the cryptocurrency market with a Bitcoin-first approach. However, it may take some time before investors fully embrace alternative coins such as Ethereum as regulatory hurdles must be cleared first.

Ethereum London Hard Fork

At the beginning of the London hard fork, the price of ether was stable, but it began to rebound about an hour later. According to CoinDesk 20 data, as of press time, the spot price of ether was about $2,807, higher than the approximately $2,600 before the hard fork went live.

One of the concerns many cryptocurrency traders have about the upgrade, called Ethereum Improvement Proposal (EIP) 1559, changes the network's fee structure so that a certain amount of the cryptocurrency's supply will be "burned," or removed from circulation. The goal of the proposal is that the blockchain's net issuance of new cryptocurrency units will slow as a result of the change, ultimately helping to set a floor for prices.

Analysts at Stack Funds and others have compared the London hard fork and the implementation of EIP 1559 to the bitcoin blockchain’s “halving” every four years, a major change in the cryptocurrency’s supply growth that occurs at a specific point in the blockchain’s lifecycle. Some investors believe bitcoin’s past halving events have helped boost the price of the underlying cryptocurrency.

According to Ultrasound.money, as of 15:06 UTC, approximately 585 ETH have been burned, which is equivalent to 43% of the block rewards produced since the Ethereum hard fork took effect at block height 12,965,000.

ETH Technicals

Currently, ETH is above the 100-day moving average for the first time since June. The price rebound has cleared a significant technical hurdle, although the price may face some resistance at the $3,000 level.

ETH’s rally has outperformed Bitcoin after months of consolidation. The ETH/BTC ratio is testing initial resistance at 0.06 but could see further gains as momentum improves.

Bitcoin Seasonality

Similar to stocks, Bitcoin is approaching a seasonal period of weakness that could encourage buyers to take profits. The chart below shows that over an eight-year period, August has had relatively weak average gains. September tends to be the worst month. Buying picks up in October and February.

Seasonal patterns can vary, especially when Bitcoin’s plunge in May deviated from its historical trend.

Stablecoins as collateral assets

According to Delphi Digital, a research firm focused on digital assets, margin assets for bitcoin futures trading have been shifting away from bitcoin and toward stablecoins. This shift has become particularly significant as open interest in cash margin has surged following the bitcoin price crash in May.

“The most important impact of this is that longs do not have the added boost of holding both spot BTC and BTC futures, and they no longer face deeper losses when their positions turn against them (because their margin is in stablecoins, not BTC),” Delphi wrote. “For shorts, they can take advantage of downtrends without their margin value being eroded, but lack protection when BTC rises.”

Altcoin Summary

TRU surges on TrustToken fundraising news: TRU, the native token of TrustToken’s DeFi lending protocol TrueFi, has surged 414% to $0.863. CoinDesk reports that TrustToken has raised $12.5 million in a new round led by BlockTower Capital, Andreessen Horowitz (a16z), and Sam Bankman-Fried’s Alameda Research. At press time, TRU is trading at $0.65 (Bankman-Fried is a billionaire who also founded the FTX cryptocurrency exchange).

HUSD’s reserves are all held in cash: The reserves backing HUSD, the eighth-largest stablecoin by market value, are all held in cash in money market accounts in the United States, the token’s issuer, Stable Universal, told CoinDesk. It’s the first time the issuer has released such information. (Accounting firm EideBailly publishes monthly certifications showing that HUSD tokens are backed 1-to-1 by dollars, but has never provided the composition of the reserves.) The disclosure comes as more stablecoin issuers begin disclosing the breakdown of their reserves as investors and regulators demand more transparency.

Are Web 3.0 tokens the next hot deal? Data tracked by Messari and published by Arca Chief Investment Officer Jeff Dorman shows that the cryptocurrency sub-sector of "Web 3.0 tokens" rose 22% in the week ending August 1, outperforming Bitcoin and all other sub-sectors, including non-fungible tokens (NFTs). Bitcoin, the largest cryptocurrency by market capitalization, rebounded 10%. Web 3.0 tokens refer to digital assets associated with the decentralized vision of the internet.

Mark Cuban's NFT platform completes Polygon integration: Billionaire entrepreneur Mark Cuban's NFT platform Lazy.com has joined forces with Ethereum extension product Polygon to provide cheaper transactions. Polygon's NFT-centric and gaming-focused Polygon studio announced the integration on Thursday, saying it will help drive mainstream adoption of digital collectibles. Users can now connect their Polygon wallets to Lazy.com, which also supports NFTs based on the Ethereum blockchain.

Chainlink Launches Cryptocurrency 'Keeper': Chainlink, the market's leading provider of data updates for blockchain-based smart contracts, is expanding its services to include decentralized off-chain computations — a job performed by a network of node operators known as "Chainlink Keepers." Chainlink Labs is also building cross-blockchain bridges with risk-monitoring components to combat fraud. (CoinDesk)