Daily Flash | As The Merge Approaches Crypto Market Is Mostly Down, LUNA Tanked 30% As South Korea Issues Arrest Warrant For Terra Co-Founder

2022-09-15, 04:47

Chart of the Day - Bitcoin and Traditional Financial Assets Performance In 2022

Bitcoin showed much worse performance due to an increased correlation with S&P 500 (which can be seen on the chart). However, it is worth mentioning that during bullish years prior to 2021 Bitcoin showed significantly better performance than other assets.

Notably, during the market downturn, commodities, especially natural gas and Brent oil, showed better performance than risky assets. On the other hand, gold, which is considered to be an inflation hedge, also showed poor performance.

As of this writing,
Bitcoin (BTC) is changing hands at around $20,018, down 1.32% in the past 24 hours,
while Ether (ETH) is trading at $1,605 or up 0.19% during the same period.

Major Layer-1 Tokens are trading in the red,
with Cardano (ADA) down by 0.4%,
Solana (SOL) -1.46%,
Polkadot (DOT) -2.11%,
Avalanche (AVAX) -2.83%,
and Cosmos (ATOM) -5.28%.

Notable gainers include:
NEO GAS (GAS) at $3.43 (43.64%),
Beam (BEAM) at $0.256 (39.62%),
PARSIQ (PRQ) at $0.145 (30.63%).

Notable losers include:
IoTeX (IOTX) at $0.0275 (-8.15%),
Mirror Protocol (MIR) at $0.229 (-26.48%),
Lazio Fan Token (LAZIO) at $5.42 (-24.44%).

The cryptocurrency market traded mostly down amid the final countdown to the much-anticipated Ethereum Merge. The transition to a proof-of-stake network will be a game changer for multiple reasons, including a 98.5% cut in energy use and reduced coin inflation.

The Merge is expected to proceed between 02:38 UTC and 03:52 UTC, or in different local timezones as follows:

🇺🇸 Miami 1:00 EDT
🇺🇸 San Francisco 22:00 PDT
🇬🇧 London 06:00 BST
🇩🇪 Berlin 07:00 CEST
🇦🇪 Dubai 09:00 GST
🇸🇬 Singapore: 13:00 SGT
🇨🇳 Beijing: 13:00 CST
🇰🇷 Seoul: 14:00 KST
🇮🇩 Jakarta: 12:00 WIB
🇻🇳 Ho Chi Minh City: 12:00 ICT
🇦🇺 Sydney: 15:00 AEST
🇮🇳 New Delhi: 10:30 IST

On the other hand, traditional markets such as the Dow Jones Industrial Average (DJIA), S&P 500 (SPX), and tech-heavy Nasdaq composite index (IXIC) were mostly flat, up 0.1%, 0.3%, and 0.7%, respectively.

In macro view, notably, annual inflation data for the United Kingdom showed a larger-than-expected decline to 9.9% versus a forecast of 10.6%.

In terms of technical outlook, as of this writing, Bitcoin (BTC) was trading at $20,142, or down 0.8% in a 24-hour period.

During Wednesday trading, though BTC closed flat relative to the last price of Tuesday’s daily candle, it traded in the range of $19,630 - $20,529, representing a 4.38% drop before a 2.77% ascent from the low.

BTC came back from the low of the support zone formed between the high and low of the daily candle on Sept. 4. Notably, the 23.6% Fibonacci level ($20,000) measured from Aug. 15 - Sept. 6 and a monthly level of $19,858 reside within the support zone to reinforce its integrity.

Notably, BTC closed above the support zone which signals the resilience of the bulls. Yet, the uncertainty ahead of The Merge will likely prevent BTC bulls from pushing the price above the support zone.

A resistance zone can be seen between a daily resistance level of $20,842 and the 38.2% Fibonacci level ($20,930) measured from Aug. 15 - Sept. 6.

The next support zone, if the bears break below, is formed between a daily support level of $18,975 and a weekly support level of $18,431.

Ether (ETH), on the other hand, regained nearly 50% of its losses from Tuesday’s dive, closing above the 50 Day-EMA ($1,629) but below the 38.2% Fibonacci level ($1,640) measured from Sept. 11 - 13.

As The Merge approaches by the hour, ETH will likely experience more volatility.

The next support zone formed is between the close of a daily candle on Sept. 7 ($1,629) and the 38.2% Fibonacci level ($1,500) measured from Apr. 3 - Jun. 18. If the bears manage to bring the price below the support zone, then we may see the price of ETH dive deeper and towards a monthly level of $1,428, breaking the short-term “higher-high” wave from Aug. 29 - Sept. 11, which would indicate further weakness.

On the contrary, if the bulls can keep the price of ETH above Tuesday’s low to prevent a “lower-low” from forming on the daily timeframe, then it will prevent a bearish outlook which the bears will likely take advantage of.

Headline of the Day - South Korea Issues Arrest Warrant for Terra CEO Do Kwon: Forkast Report

South Korean prosecutors investigating the collapse of Terra-LUNA have issued an arrest warrant for Terraform Labs co-founder and chief executive officer Kwon Do-hyung, also known as Do Kwon.

According to lawsuits filed against Kwon and Terra affiliates, prosecutors had been reviewing the Terra-LUNA collapse on fraud charges, an accusation which Kwon denied in a media interview.

The collapse of Terra’s stablecoin and sister cryptocurrency back in May led to an estimated loss of US$40 billion globally, affecting around 280,000 investors in South Korea alone.

The prosecutors will request an Interpol red notice — which asks law enforcement worldwide to locate and arrest an individual — in order to get hold of Kwon, who is currently residing in Singapore.

After the release of the news, Terra’s LUNA tanked 50% at one point but has since returned and regained some losses during early Thursday trading.

Today’s Topic - Three Things To Know Before The Merge

Beacon Chain

The Ethereum blockchain will shift away from its energy-intensive consensus mechanism PoW as its execution layer merges with the new PoS consensus layer known as the Beacon Chain.

The Beacon Chain went live in December 2020, allowing ecosystem participants to deposit or "stake" ETH to become the new validators of the network, in doing so replacing PoW miners that had previously put in the work to process transactions, produce blocks, and secure the network.

Validators

Validators are assigned to produce blocks at random and validate transactions and blocks created by other validators in the network.

Users that are able to stake a total of 32 ETH are eligible to become individual validators of the Ethereum Beacon Chain. The less ETH-abundant users can also take part in pooled or centralized staking pools by staking smaller amounts of ETH, which promises a share of rewards for validating and maintaining the network.

Proof-of-Work Fork (PoWETH)

The Proof-of-Stake-powered Ethereum blockchain will continue to use ETH after the Merge, while another hypothetical Proof-of-Work Ethereum network, dubbed ETHPOW, could fork away with the creation of an ETHW token.

This is significant to financial service providers that had previously offered ETPs (Exchange-Traded Products) tied to the Ether as the demand for the forked PoW chain will dictate whether or not the same providers offer exposure to investors.

Any existing ETPs or funds that have exposure to ETH need not do anything, as ETH will continue to exist as the Beacon Chain implements PoS consensus.

Lastly,
As reported by Cointelegraph, as the entire history of the Ethereum blockchain is carried across in the transition — all funds in wallets are still accessible and safe. The average user and ETH holder need not worry about losing their funds or making any changes to preferred wallets before the Merge.

Influencer of the Day - Tether CTO Paolo Ardoino on The Merge: 'Ethereum still doesn’t match Bitcoin': The Block Report

CTO of Tether and Bitfinex Paolo Ardoino, in a statement shared with The Block, said that Ethereum’s narrative keeps shifting and therefore it’s no match for Bitcoin.

“While Bitcoin is a form of money, Ethereum is stuck between claims of being a form of money and claims of being a platform, but ETH cannot compete with Bitcoin on the money front because there is no fixed supply, and it isn’t really a world computer yet because it has a shared global state and hence too slow to be scalable.”

Ardoino added that The Merge won’t impact the ecosystem’s Layer 2 solutions either as it doesn’t directly solve Ethereum’s scalability issues.

Buzzes of Yesterday

Highlights:
#Compound Treasury debuts crypto-backed loans for institutional clients
#Ethereum Classic Hash Rate Soars
#Celsius Banks on Future With New Plan Named ‘Kelvin’
#SEC to recommend 'flexible' pathway for token registration
#South Korea Issues Arrest Warrant for Terra CEO Do Kwon

DeFi

Compound Treasury to let institutions use digital assets as collateral when borrowing USD or USDC

Maker Raises Staked Ethereum Limit to Reduce Reliance on USDC

NFTs & Metaverse

NFT Renting Platform Rentable Shuts Down, Citing 'Close to Zero Traction'

Mining

Bitcoin mining execs talk industry consolidation, CleanSpark's asset deal

Ethereum Classic Hash Rate Soars as Merge Nears and Miners Roam

Business & Finance

Tesla launches new Cyberwhistle that can only be bought using Dogecoin

Celsius Banks on Future With New Plan Named ‘Kelvin’

Tech investor SoftBank considering a third startup investment fund

Governments & Policies

SEC to recommend 'flexible' pathway for token registration: Gensler

Crime & Order

Bitcoin money laundering suspect arrested by Dutch police

U.S. Treasury sanctions Iranian military-linked ransomware gang, including new BTC addresses

SEC sues Chicago-based crypto merchant for unregistered securities offering

Verified Twitter accounts impersonate Ethereum co-founder to push scams

Author: Gate.io Researcher Peter L.
This article represents only the researcher's views and does not constitute any investment advice.
Gate.io reserves all rights to this article. Reposting the article will be permitted provided Gate.io is referenced.

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