On Thursday we witnessed a historical event in the crypto space with the successful completion of the Ethereum 2.0 merge. Ethereum has officially become a proof-of-stake network, and now the development team can focus on improving the network’s overall scalability. The merge represented a ‘buy-the-rumor sell-the-news event,’ as typical with such widely anticipated developments.
Leading up to the merge, Ethereum proved to be one of the strongest performing cryptocurrencies throughout the summer. However, with the merge over and done with, we are witnessing increasing selling pressure for ETH when compared to Bitcoin and the altcoin market.
Bitcoin’s on chain metrics provide additional support to an imminent market collapse in crypto. We have witnessed 236,000 BTC pour onto exchanges, and an influx of this significance typically portends a large selling event. We expect this wave will be the final leg down for cryptocurrencies in 2022, and will mark a generational buying opportunity. At minimum, we expect the vast majority of altcoins to retest the lows they set in July, but more likely new multi-year lows.
Slowly but surely the United States public is becoming psychologically prepared for the announcement of a central bank digital currency (CBDC). Yesterday, the White House issued a statement highlighting the numerous benefits that a domestic CBDC could provide. While the United States government can leverage a private blockchain network for their CBDC, we believe they may also leverage a public network such as XRP, XLM, HBAR, or ALGO. We are still in the early stages of this new technology and the digital dollar is still in its conceptualization phase. When a US CBDC is officially announced, we expect to see our utility altcoin portfolio be the recipient of some major positive price action.
