Investors Turn Risk-on as 'The Ethereum Merge' Emerges

Newsletter of the week 5 August - 12 August. In this week's newsletter we cover Price Action, The Risk-on Attitude of Investors, CPI, 'The Merge' , and Crypto Fundraising in H1 2022
by Yoaquim Boom
September 19, 2022

In this week’s newsletter:

  • Bitcoin continues to face noteworthy resistance at 24k
  • Ethereum soars, nearing the $2000 mark after another market-leading breakout
  • 'The Ethereum Merge' date might finally be confirmed
  • Market soar after BLS releases CPI numbers, but not for long
  • Crypto fundraising garners more gains and gazes in H1 2022

Bitcoin Price Analysis

Bitcoin continues to consolidate within the flag pattern (See Fig.1). as continuously faces resistance at the 24k level and has been unable to close above that since its first attempt last week.

Although Bitcoin has successfully set a new high during the CPI rally on the 10th of August, it is yet to show us true strength.

Bitcoin has continued forming long wicks above the 24k level, reaching as high as 24929 at its rally peak.

Another concern is that within the flag pattern another clear pattern has emerged. Namely a bearish wedge pattern that should be closely monitored for a potential breakdown (See Fig.2).

A breakdown from here would send us to at least 21500 for short-term support.  

On the weekly chart, Bitcoin remains shaky, forming small candles with long wicks on both sides of the candle bodies (See Fig.3).

Fig. 1 1D BTC May 2022 - Aug 2022 (TradingView)

Fig. 2 1D BTC May 2022 - Aug 2022 (TradingView)

Fig. 3 1W BTC Jul 2020 - Aug 2022 (TradingView)

Ethereum Price Analysis

Ethereum has continued to show admirable strength in its uptrend throughout the last week.

Price action faces constant resistance at whole psychological numbers but is forming no recognizable pattern (See Fig.4)

Ethereum has faced resistance at numerous whole numbers ranging from 1600-2000, successfully flipping each level up to 1800, which is the level it currently faces as potential support.

On the weekly Ethereum does seem rather extended on the weekly and a drop to a decent support level at 1500-1400~ would show us a 25%> decrease in price.

With 'The Merge' coming closer all bets on ETH should be off, we can expect much volatility but to which side is the question we shouldn't be willing to place bets on.

Fig. 4 1D ETH May 2022 - Aug 2022 (TradingView)

Fig. 5 1W ETH Jul 2020 - Aug 2022 (TradingView)

Ethereum 'Confirms' Date for 'The Merge'

On August 11th Ethereum completed the Goerli merge.

Read more on The Merge in a previous week’s newsletter here.

Although the Goerli merge seems to have gone through perfectly and without hiccups it won’t decide success or failure for the upcoming Ethereum merge quite yet.

Tim Beiko, one of the leading developers at Ethereum, tweeted on Twitter: “58750000000000000000000”.

Although speculation, to some this tweet, confirms that when Ethereum hits the Terminal Total Difficulty (TTD) of 58,750,000,000,000,000,000,000 the merge will be completed.

The Expected date for the TTD to be reached is the 15th of September. Mark the date without too much certainty.

Read more on 'The Merge'

CPI Goes Low and Markets Go High

What is the CPI? The CPI is a weighted average of prices for a basket of goods and services that should accurately represent the spending of an average U.S. citizen.

It is a key measure used to gauge changes in consumer purchasing trends and inflation.

On the 10th of August, the U.S Bureau of Labor Statistics (BLS) announced the July Consumer Price Index (CPI) numbers.

The CPI was reported by the BLS at an 8.5% increase in July while the markets expected and prepared for a CPI report of 8.7%.

The lower-than-expected numbers gave investors' confidence and we saw strength in the markets. The Nasdaq and SnP500 both saw an increase of over 2% at the opening of the day.

This strength seems to have signaled a continued risk-on attitude for investors in the short term.

Crypto Startups Garnering Gains and Gazes in H1 2022

In a recent report by highlighting the fundraising rounds on H1 2022, Messari notes that the total amount of raised funds in the six-month period has already surpassed the total sum raised across the entirety of 2021.

The year 2021 saw 1313 rounds and a total of $30.2 billion raised, while H1 of 2022 saw 1199 rounds and $30.3 billion raised (See Fig. 6).

Although the number of rounds has also substantially increased in 2022 the numbers still highlight that Cryptocurrencies remain an attention-evoking industry for investors.

The most funded sector within cryptocurrency was centralized finance (CeFi). Which outpaced decentralized finance (DeFi) by a landslide.

CeFi raised more than $10.2 billion while DeFi managed to grab merely $1.8 billion in H1 2022.

Most of the investment in CeFi was accumulated by crypto exchanges, who raised a total of $3.2 billion.

Web 3 and Non-Fungible Token (NFT) projects companies raised $8.6 billion.

Finally, the blockchain and crypto infrastructure sector accumulated $9.7 billion within the 1199 rounds.

Fig. 6 Crypto Fundraising Overview H1 2022 report (