Crypto week: Ethereum Has Taken A Dramatic, Leading Role

Most analysts have been trying to explain a recent cryptomarket rebound caused by an upcoming upgrade of the Ethereum (ETH) network in September. Ethereum prices have indeed risen ahead of any other top crypto asset. The founder of the Ethereum network, Vitalik Buterin, is willing to move it to the new algorithm of Proof-of-Stake instead of leaving it with Proof-of-Work.

Many long positions were opened in July as Bitfinex registered 495,000 long positions by the end of the month instead of 180,000 long positions at the beginning of it. In light of the crypto rebound it is time to take profits as the number of long positions dropped to 230,000. The same spike of opened long positions from 120,000 to 590,000 over the period of a few days was last seen in November 2021 when ETH surged to $4,500.

All this happened amid a discussion about the new anti-inflationary model of the Ethereum network that suggests the partial burning of the commissions within the network. The amount of burned ETH decreased by 90% from its peak and was hovering around $0.5-1.0 billion coins in recent weeks. The amount of burning after an upgrade is suggested at $0.5-0.6 billion, which is lower than the current burn. That would not allow the network to introduce the anti-inflationary model. This model could be implemented once the activity within the network substantially grows, and not only during a crypto rally. The most active ETH burning projects are OpenSea (5,100 coins within the last 30 days) and Uniswap V3 (3,900 coins for the same period).

Regarding Bitcoin prices, the only source of information on its further movements remains on the chart. The head-and-shoulders pattern has been formed, and any dive below $23,200 would open downside opportunities for BTC to move to $19,000. Such price movements have been registered after the release of a strong July Non-Farm Payrolls report which did not provide good news for risky assets. The decline of unemployment to 3.5% and the rise of average hourly earnings by 5.2% may prompt the Federal Reserve (Fed) to act aggressively as it has failed to tame inflation to the right degree. The tightening of monetary policy in the United States would prompt other central bankers to raise interest rates further as prices would continue to gallop amid a strong U.S. Dollar. Overall, it would decrease the demand for risky assets, including cryptos. At least a few years will be required to bring inflation under control and this will certainly delay another crypto spring.