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Will Ether price fall after September ‘merger’?

Good morning! Welcome to Distributed Ledger, our weekly crypto newsletter that hits your inbox every Thursday. I’m Frances Yue, a crypto reporter at MarketWatch, and I’m going to bring you the latest in the digital asset market.

Find me on Twitter at @FrancesYue_ to send feedback, or tell us what you think we should cover. You can also reach me via email to share your personal stories with crypto.

Crypto at a Glance

BitcoinBTCUSD,
-0.44%
gained 6.9% over the past seven days and was trading at around $24,139 on Thursday, according to data from CoinDesk. Ether ETHUSD,
-0.79%
advanced 16.9% over the seven-day period to around $1,879. Dogecoin DOGEUSD Meme Token,
-0.52%
rose 7.8% while another dog-themed token, Shiba Inu SHIBUSD,
-0.08,
added 5.4% from seven days ago.

Cryptographic metrics
The biggest winners Price %return in 7 days

Celsius Network

$2.36

102.9%

To flow

$3.22

73.6%

Decreed

$36.53

38.2%

Zcash

$80.54

30.7%

NEAR Protocol

$5.89

30%

Source: CoinGecko as of August 11
The biggest declines Price %return in 7 days

Tenset

$2.77

-10.2%

DeFiChain

$0.98

-7.7%

LEO token

$4.79

-4.3%

ApeCoin

$7.11

-1.2%

Frax

$0.99

-0.9%

Source: CoinGecko as of August 11
“Merge” is coming

As the highly anticipated Ethereum “merger” approaches, the Ether spot and derivatives markets have seen an increase in activity.

The “merger” is an upgrade that will move Ethereum from proof-of-work to proof-of-stake, a much more energy-efficient consensus mechanism, and pave the way for blockchain to be cheaper and more productive. Tim Beiko, who organizes Ethereum’s core developer calls, predicted in July that the “merger” would go live the week of September 19.

As the date approaches, ether has gained market share, while bitcoin and stablecoin market share has declined, according to a Tuesday note from Arcane Research.

Meanwhile, in late July, open interest on ether options, which measure open contracts, exceeded that of bitcoin for the first time in history. Ether options open interest is hovering near its all-time high recently, while bitcoin options open interest is still around 35% below its peak, according to data from Glassnode.

Eliézer Ndinga, director of research at 21 Shares, said he expects more volatility in the price of ether as the “merger” approaches. “It could be up or down,” Ndinga said. “It would depend, again, on the success of the merger,” according to Ndinga.

“In the options market, some people have expiration dates around the end of September, which is obviously indicative of speculation,” Ndinga noted.

According to analysts at Glassnode, some traders seem to be positioning themselves expecting the price of Ether to rise during the meltdown and fall afterwards.

“Futures and options markets are down after September, suggesting traders expect the merger to be a ‘buy the rumour, sell the news’ style event and have positioned themselves accordingly,” the analysts wrote in a note on Tuesday.

Three-month Ether futures are trading at a lower price than its spot price. “This means that futures traders are pricing ETH at a discount after the merger,” according to Glassnode analysts.

The backwardness may also be the result of some traders’ strategy of going long in the spot market while selling ether futures in anticipation of the possibility of a hard fork, analysts noted. ‘Arcane Research.

In late July, Ethereum miner Chandler Guo offers to hard fork the Ethereum blockchain, splitting the chain, with another that continues to be based on the proof-of-work consensus mechanism. After Ethereum transitions to proof-of-stake mode, miners will become obsolete.

Listen to Mike Novogratz at the Best New Ideas in Money Festival September 21 and 22 in New York. Galaxy Digital CEO has ideas for navigating the crypto winter.

Coinbase under SEC scrutiny

Coinbase Global Inc. COIN,
-10.77%
said it has received subpoenas and requests for investigation from the U.S. Securities and Exchange Commission, highlighting additional potential pressure on the crypto exchange, after posting bigger-than-expected losses in the second quarter.

The crypto exchange said on Tuesday that it had received subpoenas and requests for investigation from the SEC “regarding certain existing and planned customer programs, operations and future products,” including its asset registration processes, the classification of certain listed assets, its staking programs and its stable and yield-generating products, according to a quarterly filing.

Coinbase would have been facing an American investigation according to a Bloomberg report in July.

In a letter to shareholders also published on Tuesday, Coinbase said the SEC in May sent the company a voluntary request for information, including its listings and listing process, but that the exchange does not yet know if this investigation will become a formal investigation. “We regularly receive formal and informal questions from regulators about our views on the development of the cryptoeconomy, our products and our operations,” the company wrote in the letter to shareholders.

Treasury Department Sanctions Tornado Cash

On Monday, the US Treasury Department’s Office of Foreign Assets Control sanctioned Tornado Cash, which allows users to conduct private crypto transactions.

As a result, Tornado Cash’s ownership and interests in property in the United States will be blocked, according to a statement from the Treasury Department on Monday.

The platform has been used to launder more than $7 billion worth of cryptocurrencies since its inception in 2019, including $455 million stolen by the Lazarus Group, a North Korean state-sponsored hacking group, according to the press release.

Tornado Cash was also allegedly used to launder over $96 million in the Horizon Bridge hack of the Harmony blockchain in June and over $7.8 million from the exploit against the Nomad Bridge earlier this month. said the Treasury Department.

Crypto companies, funds

Shares of Coinbase Global Inc.. fell 10.9% to $83.90 on Thursday, and they are down 5.6% over the past five trading sessions. by Michael Saylor MicroStrategy Inc.
MSTR,
+0.35%
fell 0.5% on Thursday to $334.08, while shares are up 7.8% over the past five days.

mining company Blockchain Riot Inc. RIOT,
+4.50%
shares gained 3.7% to $9.44 on Thursday and are up 15.6% over the past five days. Shares of Marathon Digital Holdings Inc.
MARA,
+5.07%
rose 4.5% to $17.09, with a 27.8% gain in the last five days. Another miner Ebang International Holdings Inc.. EBON,
+3.93%
saw the shares rise 1.8% to $0.60 on Thursday, for a 13% gain over the past five days.

Overstock.com Inc.
OSTK,
+2.92%it is
shares added 3.5% to $30.95. The shares gained 8.9% during the five-session period.

Shares of Block Inc.
SQ,
-3.21%,
formerly known as Square, fell 3.3% to $85.88 and was down 4.2% for the week. Tesla Inc.. TSLA,
-2.62%
shares fell 2.8% to $858.83, down 7.2% in the past five days.

PayPal Holdings Inc.
PYPL,
+0.20%
edged up 0.1% to hit $99.05, contributing to a 2.1% gain over the five-session period. Nvidia Corp.
NVDA,
-0.86%
the shares fell 1% to $179.82, with a loss of 6.7% last week.

Advanced Micro Devices Inc.
AMD,
-0.94%
shares fell 0.7% to $98.36 on Thursday, 5.3% lower than five trading days ago.

Among crypto funds, ProShares Bitcoin Strategy ETF
BITO,
+2.60%
took 2.1% to $14.92 on Thursday, while its Bitcoin Short Strategy ETF
COCK,
-2.57%
fell 2.2% to $32.34. Valkyrie Bitcoin Strategy ETF
BTF,
+2.64%
added 2.1% to $9.26, while VanEck Bitcoin Strategy ETF
XBTF,
+2.56%
was trading up 2.8% at $23.65.

Grayscale Bitcoin Trust
GBTC,
+1.47%
advanced 1.8% to $15.23.

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