Data from CryptoCompare shows that the price of Bitcoin started last week trading sideways, slightly below the $20,000 mark, before enduring a sell-off that saw it drop to $18,500. As the weekend came, BTC’s price jumped, and the cryptocurrency is now trading at $22,200.
Ethereum’s Ether, the second-largest cryptocurrency by market cap, traded in a way similar to BTC itself, starting the week at $1,600 and dropping to a $1,500 low before recovering. The cryptocurrency is now trading at $1,750.
Headlines in the cryptocurrency space this week focused on the upcoming Ethereum Merge and revealed that Ethereum Classic (ETC) has seen its hashrate hit a new all-time high of 56 terahashes per second (TH/s) after growing more than 500% year-to-date ahead of Ethereum’s upcoming Merge upgrade.
Ethereum Classic’s hashrate grew as the merge will see the Ethereum network’s mainnet merge with the Beacon Chain’s Proof-of-Stake system, marking a move away from its current Proof-of-Work system. The event will essentially force miners out of the network.
Mining operations have spent billions on equipment to mine Ethereum and compatible cryptocurrencies over the year, meaning they are likely turning to Ethereum Classic as an alternative.
Over the merge, decentralised finance (DeFi) protocol Aave has invoked new rules to protect itself from risks that could stem from a surge in borrowing demand for Ethereum. Users are looking to borrow Ethereum as there’s potential for a chain split that would create an alternative Ethereum network maintaining a proof-of-stake consensus algorithm.
If the chain splits into two during the upgrade, both networks will share the same history and as such, users with an Ethereum balance would be “airdropped” the native token of the Ethereum proof-of-work chain, called ETHPOW.
The chain split potential has even seen ETC Group announce the launch of a new Ethereum exchange-traded product (ETP), offering investors exposure to the potential Ethereum fork chain.
The physically-backed product, called ETC Group Physical EthereumPoW, or ETHWetc, is expected to be listed on Deutsche Boerse’s electronic trading platform Xetra under the ticker symbol ZETW.
Binance to convert users’ USDC into own stablecoin
Over the week, cryptocurrency market participants learned that leading cryptocurrency exchange Binance would start converting existing user balances and new deposits of USD Coin (USDC), Pax Dollar (USDP), and True USD (TUSD) into its own stablecoin Binance USD (BUSD).
The conversion is scheduled to begin on September 29 and essentially means Binance will stop supporting several major stablecoins, including the second-largest, USDC. It’s issued by Circle Financial and has a market cap of nearly $51.8 billion, behind only Tether’s $67.5 billion market cap when it comes to stablecoins.
The move, according to Binance, is intended to “enhance liquidity and capital-efficiency for users.” The exchange will also remove and stop trading on spot pairs involving USDC, USDP, and TUSD.
While Binance is planning its stablecoin conversion, crypto miner Poolin has halted BTC and ETH withdrawals due to “liquidity problems”. In an announcement, Poolin noted its wallet service was facing problems due to “recent increasing demands on withdrawals”, and as such, it would temporarily halt pay-outs on the top two cryptocurrencies by market capitalization.
Meanwhile, some of the largest DeFi protocols have been working on replenishing their treasuries from the crypto market slump. Aave Companies, the main developer behind the Aave Protocol, is looking to receive $16.28 million from the project’s decentralised autonomous organization, governed by AAVE token holders. It’s the first time the organization has asked the DAO for funds.
Similarly, Lido DAO, which manages liquid staking protocol Lido Finance, has recently approved a proposal to sell 10 million of Lido’s native tokens to the venture capital firm Dragonfly Capital. The sale followed the rejection of several proposals on how to manage its assets in order to cover two years of expenses.
KPMG predicts crypto slowdown will continue
Analysts at global audit and consulting firm KPMG have predicted that even as investments in cryptocurrencies and blockchain technologies keep on declining, they do not yet see a bottom and expect the slowdown to continue.
KPMG’s analysts noted that the current macroeconomic environment has meant crypto is being traded more like a risk asset, with a tight correlation to broader markets. For the rest of the year, KPMG predicted a “slowdown in crypto interest and investment, particularly retail firms offering coins, tokens, and NFTs”.
Franklin Templeton, an investment management giant with $1.3 trillion in assets under management, is now set to start offering two digital asset separately managed account (SMA) strategies through Eaglebrook Advisors, at a time in which KPMG says most crypto investment comes from institutional and corporate investors.
Notably, UK Economic Secretary to the Treasury Richard Fuller has said the country wants to “become the country of choice for those looking to create, innovate and build in the crypto space”. Per Fuller, the government wants the UK to be the “dominant global hub for crypto technologies”.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been
published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
Featured image via Unsplash.