Another Green Week For Crypto! - Some Drivers and Potential Threats

Some interesting weeks are approaching us! Is the rally going to continue or are we falling back to the cold crypto winter days that happened in June? In this article we will take a look at some events that might be very bullish for the crypto community in general! We will discuss the upcoming Ethereum Merge, the ongoing stable Coin hype as well as new NFT projects that might help the NFT scene out.

Ethereum Excitement

Let’s talk about Ethereum first. We all should know by now that the transition from Proof of Work to Proof of Stake is closer than ever. In this week there will be a final test-net release before the actual merge is supposed to happen on the 19th of September. Because of this a very famous miner is proposing Ethereum and run the forked version on the Proof of Work mechanism.

This is the same miner that was involved in a previous hard-fork where the Ethereum Classic coin emerged from. This is somewhat weird because many people were assuming that all the Ethereum miners will actually join together to the Ethereum Classic blockchain. This is probably also the reason why ETC pumped so hard in the last week.

The real reason behind the fork idea is probably to make some quick bucks! As we all are aware: If a hard fork is happening, people who are holding the crypto in their wallets will receive the same amount of the forked one as well. This would result in a massive increase of cryptos and could lead to massive sell off of one of these projects. This might actually also be the reason why the Ethereum prices has bee pumping lately. People want to get their hand on the upcoming hard fork version in order to sell as much as possible of it.

The question remains: Which of the Ethereum will be the more successful one, which can not be answered very easily. One metric to take into consideration is the amount of trust that the blockchain will receive by centralized stable coin issuers. In general, the more stable coins are available on the blockchain the higher is the demand and the higher is the adoption for these coins.

Stable Coin Hype

This brings me to the next important point on my list: Stable Coins! It seems like they are getting more attention again. For instance, USDT is growing in market cap now for the first time since the disaster of Terra Luna. This often happens when the markets are volatile and people are craving for more stability and hence investing into stable coins rather than the actual crypto projects.

This is nothing bad in the first place. In fact, it is something great to see as money in the stable coin sector is meaning that this is money that is waiting to get invested into the actual crypto projects! The higher the number of stable coins the more potential there is for all the other crypto projects out there. Tether is not the only example here! The Binance stable coin is also gaining popularity and market capitalization once again making it the eight biggest crypto by market cap already.

Instagram NFTs

Last but not least we need to talk about a whole new NFT sector that is getting explored by non other than Instagram. We are talking about the mainstream use case of NFTs! In this specific case Instagram has announced some of their future NFT functionality and that one of the blockchains that it is looking to us is Flow. On this news the Flow token pumped by an amazing 45% which should be considered more of a speculative rally. Nevertheless, Flow has focused from the beginning on the NFT area and is solely specialized on the mainstream adoption for NFTs.

But Flow will not be the only blockchain in the shining light. Because Instagram and Facebook have tons of millions of users, there will be actually very high demand for all of these NFTs. Because no blockchain can currently handle this kind of load it is almost sure that there will be multiple blockchains working together to make this NFT project possible. As of now there are Polygon, Ethereum and Solana in the talks but I am sure that there will be more blockchains to come. In the end Meta wants a great deal and will not shy away from dropping blockchains that are too expensive to use.

Conclusion

After those blood-bath weeks in June and early July it is really nice to see the crypto markets recovering so nicely. The main driver is probably Ethereum but some macro economic factors as well. The increasing interest rates seemed to be very bullish for all the markets and even the technical recession does not harm the markets like people were expecting them to. I am almost not trusting the whole situation. While I am feeling a weird kind of FOMO to not investing more into crypto currency as the next rally might be not long away I am also feeling a very dangerous time coming upon us.

For instance the CPI numbers will be announced n the next few day, which could cause everything that recovered to crash again. Furthermore, there is a very big instability going on between China and Taiwan which could harm the chip market industry even more than right now. And last but not least: the next FED meeting will take place in September but this time around investor will not know how the interest rate numbers will develop as Jerome Powell announced to not release it upon the meetings. This is not very good in the eyes of investors because uncertainty is the only thing that investors really hate.

Nevertheless, despite all of the uncertainty in the future I am very surprised how good the crypto markets are holding up right now. I would even consider this not the lowest of all lows and I am still very happy with it! This just shows how much I believe in the future of this asset class and technology!

Published by ga38jem on LeoFinance On 8th August 2022