Ethereum (ETH), Altcoins Look Ready to Launch
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The cryptocurrency market is shifting, with some expectations of an overall rally to higher prices. The next few days will see Ethereum (ETH) in the spotlight, in the last remaining blocks before the August 4 hard fork.
The London hard fork will not change the usage of ETH for most regular users, but will pave the way for shifting toward partial proof-of-stake, and will change the way gas fees are assigned. The Ethereum network continues to face problems with congestion, now happening during high-demand NFT minting sessions.
BTC Stability Sets the Pace
The BTC market price established itself just below the $40,000 mark, but still above its 200-day MA. There is still no guarantee for the direction, but the days spent at these levels are already followed by recoveries in most altcoins.
The BTC market cap dominance stands around 47.4%, giving leeway for the various types of altcoins to rally. Large-cap coins and older assets like XRP, ADA, LTC and others have bounced from the recent lows. DeFi projects keep recovering the losses. The recent Binance listing of Quant (QNT) led to prices outperforming, reaching a peak above $135 with strong gains in the past 24 hours.
ETH expanded to $2,406.50, almost catching up with the BTC gains in the past week. ETH volumes are also catching up with BTC levels, at above $18B per day, while BTC trading lags and is just about 20% from peak levels in May.
How the London Hard Fork May Boost ETH
The Ethereum London hard fork will slow down the issuance of new ETH tokens. Despite initial expectations, the supply of ETH did not phase out after reaching 100M tokens, and instead continues to grow in infinity. The renewed fee schedule will slow down the creation of new assets.
Additionally, the ETH2 smart contract continues to pull in tokens, in transactions of 32 ETH. The contract now holds 6,454,711 ETH in preparation for staking. Those assets are essentially taken out of circulation until staking begins and the real ETH 2.0 network is launched.
ETH active addresses are also moving up, to above 700K actively transacting wallets per day. This is still somewhat lower than the peak above 1M wallets per day in May, when ETH prices were close to $4,000.
Will Another Altcoin Bull Rally Come
It is still early to estimate if altcoins as a whole will rise and mostly follow ETH. In the past weeks, altcoin trading volume has coincided with a gradual price expansion. Now, the altcoin market has a total market cap above $800B, still below its all-time peak of $1.33 trillion.
Top DeFi tokens are still only a fraction of the altcoin market, with a total market cap expanding to above $85B, up from $62B during the most recent sell-off.
Altcoin rallies usually follow BTC, but in some cases all assets may rise together. In 2021, market recovery has been faster, shaking off negative news. The crypto market sentiment has spent more than two months in the “fear” range of emotion, with cautious trading. A shift in sentiment can return prices to previous highs.
How Volatile is the Market in the Third Quarter
Cryptocurrencies have shown significant short-term fluctuations, including weekly events. This Friday, at 15:00 UTC, the BTC price faces another round of monthly options expiry. Those events usually arrive with significant price volatility.
The options, worth $1.7B, the equivalent of 42,850 BTC contracts, may set bulls and bears against each other, with pressures to either push the price above $40,000, or down below $39,000 for the opportunity to exercise options at profit.
To track volatility, there are new tools taking into account the sentiment of the entire crypto market. A newly launched Crypto Volatility Index (CVI) shows the market is up by 10 points from last week’s lows, though still not at levels suggestive of rapid price moves, as during the April and May bull market.
Binance Trading Faces Limitations
The Binance International exchange is expanding limitations on its account creation, trading, and withdrawals. Full KYC is now required to withdraw crypto assets, while in the past up to 2 BTC could be withdrawn with a basic registration.
Additionally, the Binance futures trading platform plans to limit leverage to 20X for both new and old accounts.
The Binance exchange is an important hub for altcoin trading, giving significant liquidity to smaller assets. In the past week alone, BUSD, the dollar-pegged native stablecoin on Binance, added nearly 800M to its supply, expanding the trend of the past quarter. BUSD nearly doubled its supply in the past three months.
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