Cypto investors saw a renewed interest in the crypto markets in the last seven days with ‘Merge’ approaching. The crypto market cap breached the $1 trillion mark after two weeks, Bitcoin rose 3 per cent and Ethereum rose over 6 per cent. However, experts believe that the investors must continue the wait-and-watch approach.
“It is advisable to have a long term approach on the crypto market with a buy on dips strategy in strong tokens only,” Dileep Seinberg, founder & CEO of bill payments and utility crypto platform, MuffinPay said, “There are rate hikes and liquidity is being pumped out of markets, which does not bode well for riskier assets.”
The impact of inflation and rate hikes, Seinberg said, will not impact a particular cryptocurrency but the market overall. “Talking about the crypto winter or the rate hikes, it will not impact any token in particular, it will cast a spell on the market across,” he said.
With Ethereum’s Merge, scheduled for September 14, the energy consumption in mining these coins is expected to reduce by 99 per cent. It will change Ethereum’s mechanism from current proof-of-sale (PoS) to proof-of-work (PoW). As the miners are now shifting their focus on other Proof-of-work (PoW)-based coins, the value of other crypto assets rose.
“The anticipation building up for the upcoming ETH merge that is expected on the September 12-15 led to a 6 per cent rise this week while other PoW protocols also reached monthly highs in price and hashrate as current Ethereum miners look to utilize their computing power elsewhere post the merge,” the CoinDCX research team told Business Standard.
“DeFi led the sectoral returns appreciating 15 per cent this week led by a revival in the Luna ecosystem and due to an over-utilization of crypto collateral in DeFi protocols in anticipation of the upcoming Ethereum Merge,” it added.
Ethereum will be on the radar of the investors, however, it may not perform as well as it is expected to.
“When Ethereum’s much awaited Merge was announced, there was a sudden spurt in the prices, which fizzled out later,” Seinberg said, “Even after the Merge and during the near term, it will be on the radar of the crypto community, who is treating it as a get rich quick scheme which is not true.”