Can ETH lead the market rally signal a shift in the market?

As The Merge of Ethereum is fast approaching, ETH has risen rapidly to $1,500 in the last week, an increase of more than 45%, which in turn has driven the entire crypto market.

At the same time, BTC broke through $23,000, with an increase of more than 20% in the last week.


Has the market trend changed?

Although the price of Bitcoin rose to above $23,000, many industry analysts believe that this short-term rise is an “illusion” and the crypto market may be heading to a new low. Crypto analyst Dylan LeClair revealed that there are still tens of thousands of BTC short open positions still in existence, especially the large number of new Bitcoin short positions opened between June 15th and July 15th, which means that despite the Bitcoin may see further gains in the short term, but it is still possible to reverse course and head lower again.

Karl Jacob, founder and CEO of stablecoin platform Bacon Protocol, believes that investors have “priced in” the inflationary bad news, driving the current cryptocurrency rally.

Andrei, co-founder of the algorithmic encryption trading platform AESIR, believes that macro trends aside, the current market performance can be attributed to the following two factors:

1. Ethereum merger

After multiple delays, the Ethereum merger will take place in September. This has sparked a wave of attention and anticipation in the crypto industry. Once online, it is expected to have a profound impact on the cryptocurrency world and beyond. Staking ETH will affect the economy of ETH itself by increasing scarcity. The current ETH issuance rate is 5.4 million ETH per year, and after The Merge, the issuance rate will only be around 500,000 ETH per year.

This could threaten Bitcoin’s dominance and first-mover advantage — and that’s the problem.

2. BTC determines the trend

Bitcoin market dominance is currently around 42% and has historically played a very important role in determining the direction of the entire cryptocurrency market. When BTC goes up or down, other coins follow in its footsteps. An argument can be made that the current ETH pump cannot turn the crypto market around on a macro scale, as ETH’s dominance is 17% — or less than half that of Bitcoin.

However, even if we don’t think the ETH pump right now can revive the market and cause a paradigm shift, it is clear that Ethereum’s dominance has been growing over the past 2 years, while Bitcoin’s market dominance has declined.


If this trend continues, we could see an Ethereum-dominated crypto market as early as 2024.

Andrei said that he is looking forward to the great changes brought about by the PoS-based Ethereum. Currently, the crypto market faces the potential for a sharp drop despite ETH breaking above $1,500. It is too early to talk about a trend reversal.

However, Novogratz, founder of the cryptocurrency investment company Galaxy Digital, analyzed that: the crypto asset industry has almost no concept of risk management, and the crash of Luna coin was the beginning of the crypto asset crisis, which evolved into a full-scale credit crisis. Bitcoin is unique, it has the advantage of storing value, the price of Bitcoin can still reach $500,000 per coin in 5 years, and soaring inflation is the only factor that reduces GDP.

Posted by:CoinYuppie,Reprinted with attribution to:
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