Ether rallies above $1,700 as developers announce date for “Goerli Testnet Merger”

Looks like Ether, the native token of the Ethereum blockchain is leading the end-of-month rally in the cryptocurrency space as it rallied above $1,700, posting an 11.64% gain in the last 24 hours. The rally in Ether has sparked a rally in Bitcoin and other Altcoins, which has lifted the cryptocurrency market capitalization back above $1 trillion as of the time of this writing.

The rally in the token comes after the United States Federal Reserve, led by Chair Jerome Powell, announced a new 75-basis point interest rate hike in a bid to tame the ever-increasing inflation rate. This and coupled with the United States going into recession after posting two consecutive months of GDP declines. These data, which would usually spark bearish sentiments, did the opposite, suggesting that the effects of this news have already been priced into the market.

The rally in Ether can be traced back to an announcement by the Ethereum developers, who announced the date of the Ethereum test network “Goerli” undergoing a beacon chain merger. The blog post stated, “For the last testnet proof-of-stake transition, Goerli will merge with Prater. The combined Goerli/Prater network will retain the Goerli name post-merge. Bellatrix, the Prater upgrade readying it for The Merge will happen at epoch 112260, expected at 12:24PM UTC on August 4, 2022. After Bellatrix is activated, the Goerli/Prater merge will happen when Goerli hits a total difficulty of 10790000, expected between August 6-12, 2022.”

What you should know

  • Mergers of this kind can be described as dress rehearsals for the eventual mainnet merger. Thus far, the Ropsten and Seploia networks have been merged with their respective beacon chains. The mainnet upgrade is still slated for the 19th of September 2022.
  • Due to the excitement for the Merge, we have seen the total cryptocurrency market capitalization jump by over 6% to currently stand at $1.08 trillion as of the time of this writing. This is one of the biggest gains in recent weeks as risk appetite returned among investors as they priced in lower rate hikes ahead.
  • Ether leads gains among majors, with Solana’s SOL, BNB, and Cardano’s ADA post gains as low as 3% and as high as 8% in the past 24 hours. Elsewhere, Uniswap’s UNI and bitcoin cash (BCH) have posted gains as much as 26%.
  • The upward movement caused over $500 million in liquidations in the cryptocurrency market according to data from Coinglass. The short trades account for most of the liquidations, representing approximately $325 million or 65% of the total liquidations seen. The rest, some $175 million on long trades. Ether’s liquidations accounted for a little over half of the total liquidations seen in the market in the last 24 hours.
  • Shorts are positions betting on market declines, while longs refer to bets on rising prices. Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when a trader cannot meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open).
  • With over 65% of all liquidated traders being short positions, it would indicate that a short squeeze is in play and is contributing to some of the price gains among major cryptos in the past 24 hours. A short squeeze refers to a sharp rise in the price of an asset that forces traders who previously sold short to close out their positions, usually leading to an increase in prices.
  • Crypto exchange OKX saw over $122 million in liquidations, the most among its counterparts, with over 88% of traders betting on lower prices on the exchange. OKX accounted for 24.4% of the total liquidations seen and 37.5% of the total short liquidations.

What analysts are saying about the merger

  • Ether’s 53% rally between July 13 and July 18 gave bulls an edge in July’s $1.26 billion monthly options expiry. The move happened as Ethereum developers set a tentative date for the “merge,” a transition out of the burdensome Proof-of-Work (PoW) mining mechanism.
  • According to some analysts, by removing the additional ETH issuing used to finance the energy cost required on traditional mining consensus, Ether could finally achieve the “ultra-sound money” status.
  • According to Akshay Jain, an early-stage startup investor, explained, “ETH is issued from two sources: the execution layer (i.e. Mainnet) & the consensus layer (i.e. Beacon Chain). After The Merge, issuance from the execution layer will go to zero making the system more efficient. On Beacon Chain, the issuance will be around 1,600 ETH per day decreasing the inflation significantly from 13,000 ETH per day on PoW. Merge sets effects on monetary policies of Ethereum to become Ultrasound money.”

According to Marcel Pechman, a crypto analyst, he explained, “Ether bulls need to sustain the price above $1,600 on July 29 to secure a decent $230 million profit from the $1.26 billion option expiry. On the other hand, the bears’ best-case scenario requires a push below $1,500 to reduce the damage to $60 million. Considering the brutal $330 million leverage short positions liquidated on July 26 and July 27, bears should have less margin to pressure ETH price lower. With this said, bulls are better positioned to continue driving ETH higher after July 29 monthly options expiry.”

This news is republished from another source. You can check the original article here

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