The cryptocurrency market is characterized by incredible volatility, and recently reacted with another avalanche of declines in the face of the Fed's adamant stance and Powell's speech, at Jackson Hole. Today, U.S. indices fell amid reports of an escalation in the conflict between China and Taiwan:
- Bitcoin reacted with a sell-off below $20,000, the price of Ethereum again fell below $1,500 per token;
- Cryptocurrencies are not favored by the restrictive monetary policies of central banks. Comments by Fed member Barkin indicate that the Federal Reserve may maintain restrictive interest rate levels even through 2023. Risky assets may still come under supply pressure, which, in an environment of cooling demand, could portend a path south;
- Blockchain Aave is considering halting its Ethereum blockchain lending service ahead of the upcoming Ethereum merge. The Aave community will vote between August 30 and September 2 on temporarily halting lending until then. Aave is another project that points to the potential risks of a massive Ethereum hard fork;
- The Aave project is concerned about the risk of insolvency, which could result in an unprecedented use of Ethereum PoW (ETHW) through massive Ether lending before the merge (avalanche of speculation), which in an extraordinary market situation could cause a massive liquidation spree;
- The trend of borrowing ETH tokens (leveraged positions) could affect the price of staked Ether (stETH) on Aave where there is currently close to $907 million deposited as stETH and secured to borrow ETH on the Aave blockchain. Users may want to change their positions en masse which could cause a depeg (price deviation) of stETH to ETH (prices of staked Ethereum to Ethereum valuation). This, in turn, could indicate further liquidation risk and an avalanche of insolvency in the cryptocurrency market.
- Staked Ether are cryptocurrencies that will eventually be used to validate transactions in the face of Ethereum's consensus change from Proof of Work (proof of miners' work) to Proof of Stake (proof of validators' stake).
- Cardano, known as one of Etherem's main rivals 'Ethereum killers', is still awaiting the implementation of the Vasil hard fork, which is expected to improve Cardano's scalability, and is pointed out by developers as more important than the previous implementation of the Alonzo smart conctracts. The Alonzo fork caused a nearly 500% price rally in the summer of 2021. According to data from Pool Tool, nearly 69% of the nodes in Cardano's staking pool have already adopted the latest version v1.35.3, the blockchain is still waiting for an additional 6% to deploy Vasil.
Cardano's short-lived price rally has again ended with lower returns on the cryptocurrency. Cardano still shows a high correlation with stock market indices as well as Bitcoin and Ethereum, it is hard to expect that a hard fork of Vasil could herald a demand attack with a simultaneously unfavorable market environment. Source: Santiment
Cardano's short-lived price rally has again ended with lower returns on the cryptocurrency. Cardano still shows a high correlation with stock market indices as well as Bitcoin and Ethereum, it is hard to expect that a hard fork of Vasil could herald a demand attack with a simultaneously unfavorable market environment. Source: Santiment
Cardano chart, D1 interval. The cryptocurrency continues to weaken, the 200-session average currently running at $0.70 has been respected by bulls for almost one year, when the frantic rally under Alonzo's enabling smart contract processing hard fork ended with a massive drop. At the same time, the distance between the price and the 200-session average is shrinking which may indicate an attempted attack by buyers in the coming months. Cardano's price has remained in a narrow range between $0.40 and $0.55 for many months. Source: xStation5
Ethereum chart, M30 interval. RSI is again entering the oversold area. Declines have been temporarily halted at the 71.6 Fibonacci retracement. Further southward movement may cause another wave of liquidation. Source: xStation5
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