The mythical merge is almost here. Ethereum’s transition from Proof-Of-Work to Proof-Of-Stake is the most talked about event in crypto at the moment, and money is flowing to that blockchain. That, in turn, translated into a decrease in Bitcoin dominance. That metric measures the percentage of the whole crypto market that Bitcoin represents, and it’s currently “down at levels not seen since 2018.” Which makes sense. Because the merge is almost here and everyone placed their bets.
According toArcane Research’s The Weekly Update, “the all-time low occurred during the ICO craze in January 2018.” Which makes sense, because ICOs were the talk of the town at the moment. That impetus eventually fizzled out, however. Can we expect the same out of the merge? On the one hand, this is a structural change on Ethereum as a whole, so it’s more important than ICOs ever were. On the other hand, stakes are higher and there are no guarantees that the merge will work out as planned.
The merge isn’t the only factor
Arcane Research stats: “September has started with varying returns among our indexes. Bitcoin has started the month the worst and is down 1%. All other indexes are in the positive territory, with the Large Caps gaining 1%, the Small Caps 2%, and the Mid Caps 7%.”
So, everyone and their mothers gained ground on Bitcoin these last few weeks. Especially the Mid Caps, with Ethereum Classic as an unlikely leader. This almost forgotten cryptocurrency is also gaining ground because of the merge. When Ethereum turns from Proof-Of-Work to Proof-Of-Stake, a whole industry will disappear. The new system doesn’t require miners, so all of them are exploring their options and the original Ethereum seems to be the big winner in this scenario.
However, there’s another Classic cryptocurrency that grew even more. According to The Weekly Update: “While the large caps’ performances have been mostly flat over the previous seven days, we see massive increases in some of the smaller coins. Terra Luna Classic surged by 222% amid plans to revive the chain, while Ethereum Classic increased by 20%.”
So, even though it’s a big factor, it’s not all about the merge. Arcane Research offers even another important factor: “An essential caveat of the Bitcoin dominance sitting close to an alltime low is that stablecoins are far more significant now than the last time Bitcoin showed this low dominance. Excluding the USDT and USDC from the equation, we see that Bitcoin still makes up half of the crypto market.”
Bitcoin dominance over the last few months
Arcane Research noted that the overall weakness in the sector is driven by a “natural rotation as traders seek safety in a falling market”. The increase in Bitcoin dominance has been accompanied by a rise in stablecoin total market share.
So, the Bitcoin dominance metric is a roller coaster and the merge approaching generates extra volatility. At the moment, according to Arcane Research, ETH is at 20.35%, and BTC is at 38.26%.
Another factor to analyze is that on September 13th, the US will release its CPI for August. The estimation is that the interest rate will hike by 75bps, but the reality is that anything can happen. And the announcement will come in tandem with the merge.
Bitcoin price alanysis
Bitcoin price failed to gain pace for a move above the$20,500 and $20,550 resistance levels. There was a sharp decline below the $19,500 support and the 100 hourly simple moving average. A low is formed near $18,670 and the price is now consolidating losses. On the upside, an immediate resistance is near the $19,000 level. It is near the 23.6% Fib retracement level of the recent decline from the $20,171 swing high to $18,670 low.
Source: BTCUSD on TradingView.com
The trend line is near the 50% Fib retracement level of the recent decline from the $20,171 swing high to $18,670 low. Any more gains might send the price towards the $19,800 resistance zone and the 100 hourly simple moving average. If Bitcoin fails to start a recovery wave above the $19,000 zone, it could continue to move down. An immediate support on the downside is near the $18,650 zone.
Hourly MACD – gaining pace in the bearish zone
Hourly Relative Strength Index – below the 50 level
Major Support Levels – $18,650, $18,500
Major Resistance Levels – $19,000, $19,400 and $19,500
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