Crypto news: Ethereum ready on 'The Merge'. Bitcoin above 22 000 USD again 📈

Cryptocurrencies record a rally in the face of the upcoming Ethereum Merge. Positive sentiment in the stock market and a weaker dollar favor digital asset valuations:

• Ethereum is holding near $1,750, Bitcoin has climbed above $22,000. Bernstein Fund analysts pointed to the Ethereum Merge (provided it gets around the bugs), the potential overtaking of Bitcoin by Ether, and the growing activity in decentralized applications and the so-called second layer (Layer 2) built on Ethereum as the primary factors supporting the next bull market scenario;
• Ethereum developers reported the completion of the final, thirteenth hard fork in which they found no bugs ahead of the upcoming transition to Proof of Stake. News of the success was reported to the Decrypt portal by, among others, one of the key developers Marius van der Wijden. Investors can thus breathe a sigh of relief after Bellatrix's latest update, which turned out not to be perfect and indicated that 25% of validators are not yet ready to switch from proof of work to proof of stake;
• Ethereum has overtaken Bitcoin in several important metrics that confirm the network's growing popularity. Trading volume in Ethereum futures surpassed $1 trillion for the first time ever, a figure five times greater than Bitcoin's futures volume and illustrating the powerful speculative interest in 'The Merge. Ethereum's capitalization is only half the size of Bitcoin's; in 2016 it was 20 times smaller. The number of Ethereum transactions increased more than 40% each between August 31 and September 4, and surpassed the number of Bitcoin transactions (459,000 vs. 429,000). The total volume of transactions processed by Ethereum in 2021 turned out to be larger than Visa despite the lower throughput of the ETH network and amounted to more than $10 trillion. Transaction throughput is also expected to improve under The Merge, and the network is eventually expected to be able to process up to 100,000 transactions per second against the current few dozen;
• Ethereum currently consumes more electricity than New Zealand. Consumption through the transition from Proof of Work to Proof of Stake will be reduced by 99.5%. The Merge has not escaped the attention of Google, which has enabled live tracking of The Merge based on data directly from the Ethereum blockchain. Google is getting involved in the cryptocurrency space, on May 6 of this year the company created a Web3 team within Google Cloud. According to a recent CoinGecko report, the countries most interested in The Merge are Singapore, the United States, Canada and Switzerland, respectively;
• The Ethereum Merge stands to gain from cryptocurrency exchanges providing staking (Coinbase, among others) and decentralized organizations like Switzerland's AmpliFi, which aims to become the largest validator of transactions under the new Proof of Stake network. 
• Last week's increases occurred on high volume despite the moderately pessimistic on-chain data reports of Glassnode's latest market report. The report by no means heralded a sudden recovery. Last week we reported on the huge 'unrealized loss' of Bitcoin's short-term traders, as shown by the NUPL indicator. Short-term traders were mainly responsible for the recent rally from $18,000 to $25,000, and their capitulation could be expected should BTC enter the area of June minima again. We can therefore assume that behind the recent surges in cryptocurrencies is institutional capital, which began to flow as sentiment on Wall Street improved, joined by some individual investors.
• The primary threat to the crypto market still remains a potential developer error during 'The Merge' and negative disappointment in tomorrow's US CPI inflation reading. Its rise could make the already baseline scenario of a 75bp hike in September more likely and point a long way to further hikes. On the other hand, falling fuel prices could point to a lower inflation reading, which would benefit markets.
• Cryptocurrency lender Hodlnaut pointed to the risk of liquidating token reserves in decentralized applications should volatility reach an oversold level in the face of The Merge. Massive sell orders would come from the side of hedging protocols (smart contracts), which can execute hedges by executing automatic sales in the face of exceptional circumstances.

The chart shows Bitcoin's past three halving cycles and the fourth that is underway. We are currently near the halfway point of the cycle, which usually coincided with the price bottom. The next halving is 853 days away. Each successive halving halves the reward for miners and halves the supply of Bitcoin. Source: halvingtrackerThe popularity of futures trading on Bitcoin is falling and is at 2-year lows. Traders are clearly more willing to trade on Ethereum now. The chart though well shows the downward trend takes into account the change as of August 22. The latest data shows a drop in volume on Bitcoin futures in the neighborhood of $200 billion versus $1 trillion for Ethereum. Source: Intotheblock, ETC GroupThe value of fees on the Ethereum network although it is at hitorical minima exceeds the daily fees on Bitcoin or Binance Smart Chain which illustrates the network's growing popularity and competitive advantage. Ultimately, Ethereum developers are expected to focus on lowering the network's fees called 'gas fees' in future forks. Source: Etherscan

The index measuring Bitcoin's market sentiment 'Fear and Greed Index' continues to indicate levels between fear and extreme trepidation which depicts a persistent oversold market. Source: alternative.meEthereum chart, H4 interval. Ethereum is attracting a wave of interest due to the upcoming 'The Merge. RSI level lower than Bitcoin which indicates still a lot of room to reach overbought levels. The completion of the recent hard fork contributed to the euphoria, however, we saw a modest realization of risk with the news of its completion. Currently, Ether is back to rising above $1770. Previously, the entry above the 200-session average on the H4 interval resulted in a nearly 90% increase in the token's price. Ethereum overcame the average again reacting with increases from the levels at $1700, which is a positive signal for the bulls. Source: xStation5Bitcoin chart, H4 interval. Bitcoin has already bounced nearly 15% from the lows of the beginning of the month. On its way, the cryptocurrency has overcome the first significant resistance near $21,500, where the 200-session average on the 4-hour interval ran. At the same time, the RSI level above 70 indicates a potential correction, from these levels the cryptocurrency has repeatedly reacted with declines in history. At the same time, Bitcoin's reaction remains very positive, even more so in light of on-chain data improving thanks to the negation of further declines, which just a week ago seemed very legitimate. Source: xStation5