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Why The Ethereum Merge Could Be Bearish

This crypto market is on a strong churn higher, and unless something crazy dramatic and bearish happens, this week will be the sixth consecutive green week. Six straight weeks of wins. 

This Friday’s Litepaper highlights some of the major events hitting various cryptocurrency exchanges, some crazy bullish news regarding BlackRock ($BRK), and why I think Ethereum’s ($ETH) Merge could be very, very ugly for its price action

Before we look at those topics, here’s how the crypto market ended the day:

Cardano (ADA)
$0.535
0.75%
Binance Coin (BNB)
$324.30
0.12%
Bitcoin (BTC) $24,148 0.84%
Dogecoin (DOGE)
$0.072
1.27%
Ethereum (ETH)
$1,918
2.00%
Polkadot (DOT) $9.41 2.39%
Solana (SOL)
$43.86
2.31%
XRP (XRP)
$0.375
-1.31%
Altcoin Market Cap
$666 Billion
1.02%
Total Market Cap
$1.12 Trillion
0.93%

BlackRock Bitcoin News Is Yuge Featured Image

If there’s one catalyst that early cryptocurrency adopters have been waiting for, it’s a clear sign that traditional and institutional money throws their moola into the crypto space. 

When you take things one day, one week, or one month at a time, it is hard to forget that there has already been many traditional big money players in the space. But none so big as this behemoth:

BlackRock ($BLK)

You don’t get much bigger than BlackRock when it comes to ‘institutional’ and ‘traditional’. 

BlackRock is launching a spot – yes, a spot – private Bitcoin trust for its institutional investors, with Coinbase ($COIN) as a partner. 

“Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities…” – company statement.

How I interpret that statement is like this, “Our clients are sick of seeing the massive gainz made by amateurs and want in, and they’ve been bothering us about it for a long ass time, and now there’s too many of them that want in, so we’re gonna do it.”

So if you were looking for another signal that traditional money is moving into the crypto space, here it is.


Coinbase ($COIN) just can’t seem to catch a break lately. Yesterday, S&P Global Ratings lowered Coinbase’s rating from BB+ to BB. The rating agency cited the bear market in cryptocurrencies as well as increased scrutiny from the SEC. 

Leon Li, the founder of cryptocurrency exchange Huobi, is on the lookout for a buyer of 60% ($3 billion) of Huobi. Tron ($TRX.X) Justin Sun and FTX ($FTT.X) founder Sam Bankman-Fried are rumored to be interested. 

Liquidity provider Paradigm and FTX are planning on launching spread trading – no word on if non-accredited US clients will be able to take advantage of this market. 

Speaking of FTX, the nation of Uzbekistan announced a large collection of cryptocurrency exchanges are now banned from operating in their country unless they have a license. The exchanges so far include but are not limited to FTX, Binance, Bybit, and Huobi.


Ethereum Merge Is Crazy Scary Featured Image

There is almost no single upcoming event in the crypto world more important than the upcoming ‘Merge’ for Ethereum ($ETH.X). The ‘Merge’ transitions Ethereum from a Proof-of-Work (PoW) network to a Proof-of-Stake (PoS). After the conversion, ETH is anticipated to be more accessible, efficient, and scalable. 

But from a price action perspective, it could be disastrous. I’m taking a devil’s advocate approach here. While I believe that the upgrade is great for Ethereum’s ecosystem and the broader cryptocurrency environment as a whole, I believe the after-effects could be disastrous for its price. 

Remember about all those people who locked up their ETH?

I am going to water this entire thing down as much as possible, probably to the point where the trollololol fan bois are going to post things like, ‘EHRMEGURD DUR STOOPIDS DOESN NO WUT TALKING ABOOT.’

There are/were a number of steps to completing the switch from PoW to PoS. One of the first steps was to get enough people to commit to supporting the switch to PoS. ETH needed enough validators, and you could only be a validator if you could commit 32 or more ETH. 

OR

If you didn’t have 32 ETH yourself, you could form a club of your besties and pool together your ETH and create a staking pool. 

But here’s the catch:

That ETH is locked up until the switch to PoS is complete. Which is slated to ‘finally’ be done on September 15, 2022. Sounds great, right? If you’re a long-term investor or a hedge fund, this doesn’t phase you. If you’re a normal person, let’s take a look at the hell you’ve had to go through:

It’s Like Watching Your Pet Die Behind A Glass Cage, And There’s Nothing You Can Do About It

Imagine you’re one of the lucky few who bought Ethereum in November 2020, let’s say, at an average of $500. You feel good. You think, ‘Won’t take long for the Merge; I can afford this.’ You think ETH will be 1,000x, so risking money you can’t afford to risk will pay off soon, the Merge isn’t too far away right?

Six months roll by, and it’s now May 2021. You are high on your genius investment. Your $500 ETH gained almost 800%. 

Summer of 2021 passes. Ya, there was some anxiety, but you dealt with it. You convince yourself you have bawls of steel – easy to say that when you can’t touch your ETH. 

November 2021 hits, and your $500 ETH from a year ago is up almost 1,000%. Not only are you a God-damned genius, but you’re probably the next Warren Buffett. 

Enter January 2022. Shit. You want to sell. You remind yourself, “OMG I CAN’T! ALL THOSE GAINZ!!! <sad emoji sad emoji sad emoji>.”

Imagine if you are/were one of those ETH hodlers, stuck in a position you can’t get out of. Maybe you’re doing just fine, but a lot of people are not. They’re thinking, ‘when is this going to end?’

Eight months of hell, eight months of losses. You can’t get out. You’re stuck. You’re no longer up 1,000%. 

It’s June 2022, and you end the month with your ETH slightly more than double what you paid for it. Nice gains in any market, but all you can think about is the what-ifs and the misery of watching all those gains go down the tube.

Buy the rumor sell the news is something that occurs in the crypto space, too, so the anticipation of some selling when the Merge is complete is already a concern. Couple that with the trapped validators, many of whom want to GTFO ASAP, and you have a recipe for some crazy volatility and probable selling pressure.


Bullets

Bullets From The Day:

😝Peter Schiff says investors should sell Bitcoin amid what he calls a ‘suckers rally.’ The crypto hater predicted that Bitcoin wouldn’t make another new all-time high. You know what else won’t make a new all-time high? Schiff’s bank that he’s forced to liquidate. Read more at Finbold

⛏️Ethereum miners are in a tough spot. The ETHPoW fork is reportedly ‘inevitable’ by the team behind ETHPoW. However, the ETC Cooperative suggested the ETH miners just move on to ETC. ETHPoW’s team claimed that ETC doesn’t have the ability to sustain all the computing power necessary. Full story from TheBlock

💸Binance founder CZ (Changpeng Zhao) reported that roughly 83% of the stolen Curve ($CRV.X) has been recovered. They are currently working on the return of those funds. Cryptonews has the full scoop