💡 Bitcoin has surpassed the $27k level and the liquidation of cryptocurrencies topped $100 million. Bitcoin's dominance in the cryptocurrency market has increased to 50%. Ether trades at a 27% discount to fair value. LINK is growing rapidly, outpacing other cryptocurrency leaders. Toncoin led bitcoin's rally in the cryptocurrency market after Telegram approval. Canto moves to a ZK-powered second tier on Ethereum.
Bitcoin saw significant gains on Monday, driven by the growing consensus among U.S. interest rate traders that the Federal Reserve will keep borrowing costs steady this week and for the rest of the year.
The leading cryptocurrency reached $27,300, its highest level since August 31, following an 8% increase since the appearance of a concerning "death cross" pattern on its daily price chart a week ago. This rally questions the reliability of the death cross as a sole indicator.
This resurgence aligns with Fed funds futures, which now indicate a 99% probability of no rate changes between 5.25% and 5.5% this Wednesday. Futures also imply a 69% chance of no action in November and a 58% likelihood of the same in December. The central bank's 525 basis points rate increase since March 2022, aimed at curbing inflation, has been seen as a contributing factor to the crypto market's challenges in the past year.
The whipsaw in prices caught some crypto derivatives traders off-guard, liquidating roughly $100 million worth of leveraged trading positions over the past 24 hours. Short traders, who attempted to profit from lower prices, endured $60 million in losses, while long traders, who bet on higher prices, suffered $40 million in losses.
Futhermore, the Bitcoin market dominance rate, which tracks the largest cryptocurrency's share of the total digital asset market, rose to 50.2% earlier on Monday, its strongest level in a month and near a 26-month high of 52% reached at the end of June.
Ether (ETH), the native token of the Ethereum blockchain, is currently trading at a 27% discount compared to its fair value, as determined by analysis conducted by RxR, a research-focused partnership between Republic Crypto and Re7 Capital.
RxR's fair value estimation is derived from a blended version of the Metcalfe law, which takes into account the active user base on the continually expanding Ethereum scaling networks and active users on the Ethereum mainnet to assess the network's fair worth. Unlike traditional Metcalfe law models, which primarily consider the active user base on the mainnet, RxR's approach captures the broader network activity.
According to the Metcalfe law (ML), the network's value is directly and proportionally related to the square of its user count. Ether serves various purposes, including enabling transactions on the Ethereum blockchain, facilitating interest accrual, supporting network security through staking, storing non-fungible tokens, and more. Consequently, the value of ether has historically been closely intertwined with the level of activity on the Ethereum network.
This analysis suggests that ether's valuation is more reliable than that implied by the traditional ML model, which does not account for the growing activity on layer 2 networks or off-chain solutions built on top of the mainnet to alleviate scaling and data congestion issues. In essence, this indicates that ether may not be overvalued, contrary to what the traditional ML model might suggest.
The LINK token, linked to Chainlink's decentralized oracle network on Ethereum, surged over 10% on Monday, outperforming the wider cryptocurrency market. This rise is attributed to Chainlink's partnerships with traditional financial institutions.
Chainlink's co-founder, Sergey Nazarov, spoke at SWIFT's Sibos event, discussing cross-chain settlement using Chainlink's Cross-Chain Interoperability Protocol (CCIP). Chainlink is collaborating with the Depository Trust and Clearing Corporation (DTCC) to enhance blockchain interoperability, enabling seamless interaction between different blockchains. This news has fueled optimism and driven LINK's value up to $6.83.
Toncoin has exhibited significant growth, rising by 6.2% within the last 24 hours, reaching a value of $2.5. Impressively, it has surged by 45% over the past week. This recent rally can be attributed to a fresh endorsement from the Telegram messaging platform.
Investors are showing great enthusiasm for Toncoin's future prospects following the joint announcement by Telegram and the TON Foundation. They revealed the launch of a new self-custodial wallet named "TON Space" during the Token 2049 conference in Singapore last week.
Moreover, Pavel Durov, the creator of Telegram, further bolstered Toncoin's standing by endorsing it as the preferred blockchain network for expanding web3 infrastructure on the platform. These developments have fueled Toncoin's recent surge in value.
In other news, the Layer 1 blockchain Canto is undertaking a strategic migration to the Ethereum ecosystem. Canto will transform into an Ethereum Layer 2 platform, incorporating zero-knowledge proofs. This transition is in collaboration with Polygon, a prominent Ethereum scaling developer, and leverages the Polygon Chain Development Kit (CDK) with a focus on integrating real-world assets.
Originally launched in 2022, Canto served as a versatile Layer 1 blockchain with Ethereum Virtual Machine compatibility.
Canto's move aligns with a trend of Layer 1 blockchains integrating with Ethereum. For instance, Celo's development firm announced a similar transition to Ethereum Layer 2 using Optimism's OP Stack in July. In the subsequent month, Andre Cronje, co-founder of the Fantom Foundation, considered a similar move, aiming to convert Fantom Layer 1 into an Ethereum Layer 2 via optimistic rollups.
Discover the Week's Most Significant Fundraising Achievements
During the previous week, cryptocurrency initiatives successfully secured a collective sum of $99.5 million in funding.
Notably, Fipto led the way with an impressive $16 million seed round, claiming the top position for the largest fundraising round. Following closely behind were Pahdo Labs and Flashwire with noteworthy funding achievements of their own.
You can also explore the most notable raises of this week.
A Web3 startup called Bastion recently emerged from stealth mode after securing seed funding led by a16z crypto. Bastion's mission is to help enterprises seamlessly integrate Web3 infrastructure into their existing tech systems. Founded by former a16z crypto executives Riyaz Faizullabhoy and Nassim Eddequiouaq, the funding will be used to expand operations, recruit top engineering talent, and diversify product offerings. Despite the ongoing crypto market challenges, the funding round was a success.
Earlier this month, a16z also led a $54 million funding round for Story Protocol, a blockchain-based platform for intellectual property ownership. In June, a16z opened a London office, likely in response to increasing regulatory pressures in the United States.
French fintech firm Fipto, specializing in Treasury Management, has successfully raised €15 million in seed funding. This substantial investment will be deployed to expedite the development of its platform, designed to empower businesses in efficiently managing their corporate treasury and facilitating international payments across both traditional and digital currencies via blockchain technology.
Fipto operates as a payment and cash management service, ensuring the utmost security and compliance when bridging the gap between conventional and digital currencies. Beyond payment capabilities, Fipto offers clients the ability to assert complete control over their digital assets while simultaneously overseeing and consolidating their corporate treasuries, aligning seamlessly with French DASP and upcoming European MiCA regulatory standards. Furthermore, the platform boasts robust security features and permission tools to safeguard assets comprehensively.
Blockchain infrastructure startup Movement Labs has secured $3.4 million in pre-seed funding to launch a network of blockchains built on the Move smart contract development language. The funding will be instrumental in furthering the adoption and development of Move, a language designed to enhance security by safeguarding against attack vectors like reentrancy.
Movement Labs has ambitious plans to extend its network by establishing connections with both Ethereum and Cosmos. The company has already developed a robust framework, featuring high-throughput modular Move Virtual Machines, to bolster interoperability within the blockchain ecosystem.
On September 15, 2022, the Ethereum network activated The Merge upgrade. The blockchain transitioned to the Proof-of-Stake (PoS) consensus algorithm.
It was expected that the hard fork would improve the energy efficiency of the ledger and exert deflationary pressure on the cryptocurrency.
In December 2020, developers launched the Beacon Chain as a signaling network. This blockchain, based on PoS (Proof-of-Stake), operated in parallel with the Ethereum mainnet, which relied on Proof-of-Work (PoW). However, there was no economic activity in it except for ETH staking.
As part of The Merge, there was a "merge" of execution layers (mainnet) and consensus (Beacon Chain). Validators replaced miners, and the project fully transitioned to Proof-of-Stake.
According to developers' claims, by September 15, 2023, the upgrade reduced the system's energy consumption by 99.95%. This trend is also confirmed by data from the Cambridge Centre for Alternative Finance.
According to the organization, before the transition to PoS, the blockchain consumed over 20 TWh of energy, and now the figure does not exceed 0.3 MWh.
Together with the London upgrade activated in August 2021, The Merge hard fork exerted significant pressure on the supply of ETH, reducing the rate of cryptocurrency issuance.
The emission dynamics depend on two main processes: token issuance and removal from circulation. Their ratio determines whether Ethereum is inflationary or deflationary.
With the London upgrade, developers implemented EIP-1559, which involves burning a portion of transaction fees depending on the blockchain's congestion.
As of September 15, 2023, the network has removed from circulation over 4.27 million ETH, equivalent to more than $6.9 billion at the time of writing.
The Ethereum network continuously generates new cryptocurrency; however, the staking rewards are significantly lower than the rewards for PoW mining. As a result, the net issuance of ETH has decreased by approximately 85%.
As mentioned earlier, the token burning mechanism removes a portion of the cryptocurrency from circulation through transactional activity. The system can also penalize validators for rule violations, further reducing the supply of ETH in the market.
These factors have led to a 0.5% reduction in cryptocurrency supply since the migration to PoS.
In the past year, the Ethereum supply has decreased by 300,000 ETH. If the blockchain had not transitioned away from PoW, an additional 3.8 million ETH would have entered circulation during the same period.
Users were given the ability to stake assets with the launch of the Beacon Chain. Following The Merge, interest in the process significantly increased, with the volume of assets locked in favor of the validation mechanism growing by 30% in eight months.
The activation of Shapella in April 2023 further fueled investor interest in staking. In just six months since the update, the figure has increased by 60%.
At the time of writing, there are over 29.79 million ETH in the Ethereum deposit contract.
Ethereum validators are responsible for data storage, transaction processing, and adding blocks to the blockchain. They receive rewards for their work, which, until the activation of Shapella, accumulated in their balances.
The influx of liquidity is largely due to the fact that these ecosystem participants gained the ability to unlock their assets. In the eyes of investors, the finalization of PoS has turned staking into a comprehensible and relatively low-risk model of passive income.
Thanks to The Merge, a new segment emerged in the market - liquid staking. And the Shapella upgrade served as an additional driver for the development of this direction.
In the smart contracts of applications in this category, approximately 10.87 million ETH are locked. These account for approximately 36% of the total funds in the Ethereum deposit contract.
In addition to liquid staking services, centralized platforms and other market participants are also involved in the process. Leading providers include Lido, Coinbase, and Kraken.
The Merge and the subsequent activation of Shapella also created the necessary conditions for the emergence of new narratives, such as restaking.
The Merge serves as the foundation for the further development of Ethereum, including in the context of blockchain scalability. The hard fork made the network energy-efficient and had a positive impact on the cryptocurrency supply, but by itself, it did not solve the existing issues in the ecosystem.
The project's development roadmap involves a series of significant updates. In particular, developers plan to fully integrate zero-knowledge proof technology and transform Ethereum into a quantum-resistant network.
Conferences are a great opportunity to grab the attention of the whales in the crypto industry, spread the word about your project and win some funds! A quick line-up of the upcoming conferences below!