Hero's Image

The Hash Insider: Ethereum surges on the eve of the Merge week

The Hash Insider

The NCI closed Sunday (09/11/22) 10% above last week’s closing. Positive performance was influenced by ether (ETH), up 12.9%, while bitcoin (BTC) rose 8.8%. 

Following a week of uneventful price action defined by sticky prices, BTC remained just below the $20,000 mark throughout Labor Day (US holiday) while ETH took off, gaining $100 on its way to surpassing the $1,650 mark as Merge enthusiasm grew on the eve of the Bellatrix upgrade

ETC, Ethereum Classic’s native token, outperformed most other digital assets as investors may have bet the Ethereum offshoot could benefit from the post-merge influx of miners looking for a new PoW home. 

However, on Tuesday, concerns about Europe’s energy crisis impacted both traditional markets and crypto assets. ETH prices began plummeting midday, nearing the $1,500 mark after a 10% drop by the end of Tuesday. BTC prices also sank around the same time, eventually trading below the $19,000 mark.

In the early hours of Wednesday, crypto asset prices began to recover. While BTC registered modest gains before settling above $19,000, ETH rocketed back toward $1,650. Both cryptocurrencies plateaued as markets closed in North America. 

Prices rose despite the announcement of the largest ECB rate hike (75 bp) since 1999, which investors likely anticipated after the astronomical inflation readings coming out of Europe earlier in the month and the growing tensions between Russia in its energy-dependent markets.

On Thursday, prices remained mostly stable despite more tough words from Fed Chairman Jerome Powell at a Q&A held at the Cato Institute. Crypto asset prices seemed immune to the central banker’s reiteration of his unwavering commitment to the pursuit of price stability. 

A lower-than-expected reading of initial jobless claims from the US, an indicator that investors have used to gauge how much room there is for the Fed’s hawkish monetary intervention, also left the market unfazed.

On Friday, BTC surprised analysts with a puzzling 10% rally, registering its largest daily surge in six months despite no clear driver. ETH prices also rose, although not as drastically. The rally may have been influenced by the dollar index’s (DXY) weak performance, which has shown a strong negative correlation with digital asset prices as of late. 

Regardless, BTC’s leap despite Powell’s hawkish outlook being on full display is a clear sign that investors remain skeptical that the Fed could follow up its tough talk with tough action. Crypto markets seemed to call the Fed’s bluff, betting that waning economic activity will force the Fed to pivot sooner rather than later. 

During the weekend, ETH and BTC prices continued to slowly rise as Merge week drew closer and BTC’s price was sustained by the continuation of Friday’s unexpected optimism.    


Other news 

Ethereum’s Bellatrix fork, the final prerequisite for The Merge, was successfully implemented. The upgrade embedded the necessary Merge logic for Beacon Chain validators to monitor the PoW chain and start block production post-Merge.

Bank of America published a report on Friday noting that the switch to a PoS consensus mechanism as result of Ethereum’s Merge may result in great institutional adoption, allowing some institutional investors to purchase ETH for the first time as ESG concerns regarding Ethereum’s power hungry PoW system gives way to the marginal energy consumption of PoS. BAC also noted in its report that the prospect of great post-Merge staking yields could contribute to an influx of institutional investors.  

The White House published a report on Thursday expressing concerns about the impact of PoW mining on climate change. The report cites Ethereum as one of the primary PoW culprits, but did acknowledge its eminent shift to PoS: “There have been growing calls for PoW blockchains to adopt less energy-intensive consensus mechanisms. The most prominent reaction has been Ethereum’s promised launch of  Ethereum 2.0, which uses a PoS consensus.”


Looking ahead

Merge week is here and ETH prices are bound to to fluctuate as news of the success or failure of the the shift to PoS trickles out. For a comprehensive analysis on Merge and post-Merge risks for investors, access our research team’s report here. 

On the macro front, CPI figures, to be released on Tuesday as markets open in the US, could further bolster last week's bullish bet on a Fed pivot or prove investors wrong. US jobless claims and retail sales, to be released on Friday, will provide additional information that could temper market expectations for the Fed’s upcoming



This material expresses Hashdex Asset Management Ltd. and its subsidiaries and affiliates (“Hashdex”)'s opinion for informational purposes only and does not consider the investment objectives, financial situation or individual needs of one or a particular group of investors. We recommend consulting specialized professionals for investment decisions. Investors are advised to carefully read the prospectus or regulations before investing their funds. The information and conclusions contained in this material may be changed at any time, without prior notice. Nothing contained herein constitutes an offer, solicitation or recommendation regarding any investment management product or service. This information is not directed at or intended for distribution to or use by any person or entity located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Hashdex to any registration or licensing requirements within such jurisdiction. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of Hashdex. By receiving or reviewing this material, you agree that this material is confidential intellectual property of Hashdex and that you will not directly or indirectly copy, modify, recast, publish or redistribute this material and the information therein, in whole or in part, or otherwise make any commercial use of this material without Hashdex’s prior written consent. 

Investment in any investment vehicle and cryptoassets is highly speculative and is not intended as a complete investment program. It is designed only for sophisticated persons who can bear the economic risk of the loss of their entire investment and who have limited need for liquidity in their investment. There can be no assurance that the investment vehicles will achieve its investment objective or return any capital. No guarantee or representation is made that Hashdex’s investment strategy, including, without limitation, its business and investment objectives, diversification strategies or risk monitoring goals, will be successful, and investment results may vary substantially over time. Nothing herein is intended to imply that the Hashdex s investment methodology or that investing any of the protocols or tokens listed in the Information may be considered “conservative,” “safe,” “risk free,” or “risk averse.”

Certain information contained herein (including financial information) has been obtained from published and non-published sources. Such information has not been independently verified by Hashdex, and Hashdex does not assume responsibility for the accuracy of such information. Hashdex does not provide tax, accounting or legal advice. Certain information contained herein constitutes forward-looking statements, which can be identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue”  “believe” (or the negatives thereof) or other variations thereof. Due to various risks and uncertainties, including those discussed above, actual events or results, the ultimate business or activities of Hashdex and its investment vehicles or the actual performance of Hashdex, its investment vehicles, or digital tokens may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward- looking statements in making their investment decisions. None of the information contained herein has been filed with the U.S. Securities and Exchange Commission or any other governmental or self-regulatory authority. No governmental authority has opined on the merits of Hashdex’s investment vehicles or the adequacy of the information contained herein.

Nasdaq®, Nasdaq Crypto Index™, NCI™, Nasdaq Crypto Index Europe™ and NCIE™ are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Hashdex Asset Management Ltd. The Hashdex Nasdaq Crypto Index ETF and Hashdex Nasdaq Crypto Index Europe ETP (the “Products”) have not been passed on by the Corporations as to their legality or suitability. The Products are not issued, endorsed, sold, or promoted by the Corporations.THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCTS.

Logo Hashdex
Les informations contenues sur ce site web sont uniquement à des fins d'information et Hashdex, ainsi que ses filiales, ne sollicitent aucune action fondée sur de telles informations. Les informations ne doivent pas être interprétées comme des conseils en matière d'investissement, ni comme une recommandation, une offre ou une sollicitation d'achat ou de vente de tout instrument financier ou produit, ou d'adoption de toute stratégie d'investissement. De plus, les informations contenues sur ce site web ne constituent pas une déclaration que les instruments financiers qui y sont décrits sont adaptés ou appropriés pour toute personne. Les performances passées ne sont pas une indication de performances futures. Ce site web peut contenir de la publicité pour des produits financiers.