Caution on Ether Ahead of London Hard Fork

PLUS: Bitcoin is stuck below $40K

Everything you need to make sense of the crypto markets and beyond By the CoinDesk Markets Team Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets August 4, 2021 Sponsored by     Bitcoin (BTC) -1.7%  $38,101 Ether (ETH)  -0.3%  $2,501 (Price data as of August 4 @11:00 UTC) If you were forwarded this newsletter and would like to receive it, sign up here.  Good morning, and welcome to First Mover. Here's what's happening this morning: Market Moves: Analysts Take Cautious Stance on Ether as London Hard Fork Nears "The EIP-1559 upgrade is overrated," one trader said. Technician's Take: Bitcoin Stuck Below $40K; Eyes Short-Term Oversold Bounce Bitcoin buyers could maintain support above $36K. And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and me at 9:00 a.m. U.S. Eastern time. Today the show will feature guests: Paul Brody, Ernst & Young Principal & Global Innovation Leader Sam Trabucco, Alameda Research Quantitative Crypto Trader Lex Sokolin, ConsenSys Global Fintech Co-Head – Lawrence Lewitinn Biggest Movers These are the biggest movers in the CoinDesk 20 over the past 24 hours:   Gainers: Cardano (ADA): +2.9% Chainlink (LINK): +2.8% Filecoin (FIL): +2.3% Polkadot (DOT): +1.2% EOS (EOS): +0.9% Losers: The Graph (GRT): -3.2% XRP (XRP): -1.8% Bitcoin (BTC): -1.8% Ethereum Classic (ETC): -1.7% Dogecoin (DOGE): -1.3% The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges. A message from AAX Powered by London Stock Exchange Group Technology, AAX offers a wide range of crypto products and services, including spot and futures for over 60 trading pairs, P2P fiat trading, high yield savings, research, education, OTC and more institutional offerings.    - 110 USDT futures bonus upon registration - Trade at $0 fees (limited-time offer) - 10% APY on AAX Savings (limited-time offer) - Lucrative price prediction campaigns - Support for 20+ fiat currencies - 24/7 customer service - Arguably the finest crypto trading app in the space   Make the most out of your crypto holdings. Grow with AAX. Sign up now. Market Moves by Omkar Godbole Analysts Take Cautious Stance on Ether as London Hard Fork Nears As the crypto community awaits the supposedly bullish London hard fork on the Ethereum blockchain, some analysts are taking a cautious stance on ether (ETH) and foresee little price reaction after the upgrade.    "I don't expect much action in any direction," trader and analyst Alex Kruger said. "The upgrade itself is overrated, and what matters is what happens after."   Ether is the native token of Ethereum's blockchain, which is scheduled to undergo a hard fork, or backward-incompatible upgrade, called "London" on Aug. 5. The change will implement four proposals, including the Ethereum Improvement Proposal (EIP) 1559 that will activate a mechanism to burn a portion of fees paid to miners.    Once the upgrade takes effect, it is expected to bring a deflationary asset appeal to ether, possibly drawing more investment demand for the cryptocurrency. That's the popular narrative in the crypto community. "Deflationary ETH upgrade EIP-1559 scheduled. Today's dip is a blessing," Simon Dedic, managing partner at Moonrock Capital, tweeted on Tuesday.   However, while the upgrade will introduce a burn mechanism, the amount of ether destroyed will depend on the actual network usage. In other words, EIP-1559 does not directly influence ether's supply. In that sense, the bullish narrative appears overdone for now, Kruger said.    Stack Funds' COO and co-founder Matthew Dibb said these types of changes are similar to bitcoin (BTC) halvings and take time to exert an effect. "Long-term, we believe that ether will see significant price appreciation as a result of this upgrade," Dibb said. "However, we aren't expecting an immediate move in either direction."    Bitcoin halving refers to a programmed code that reduces the per-block issuance of the cryptocurrency by half every four years. Halving makes bitcoin's monetary policy predictable. The EIP upgrade does the exact opposite.   "It is difficult, however, to predict exactly how much ether will be burnt over time given that the base fee dynamically adjusts according to network activity and demand for block space," CoinDesk's Christine Kim noted.    Another source of uncertainty is the impact of EIP-1559 on miner economics and how the community will respond after the upgrade. According to Compass Mining, miners will see their revenues dip by 20% to 30% after the upgrade because part of their fees will be burnt.    All these things will become apparent over time. Thus, traders may sit on the fence in the short term – more so as the popular bullish narrative appears to have been priced in, according to Pankaj Balani, CEO of Delta Exchange.   "The upcoming upgrade could be a non-event," Balani said. "The cryptocurrency remains dependent on bitcoin in terms of price action in the short term."    The options market seems to agree with Balani. Ether's one-month implied volatility continues its sideways churn, a sign investors do not expect big moves over the next four weeks.    Ether one-month implied volatility (Source: Skew) Joel Kruger, a currency strategist at LMAX Digital, said: "The combination of the market running up into technical resistance at a time when the event is happening could indeed translate to a sell-the-fact reaction." However, setbacks, if any, are likely to be well supported down into the $2,000 area, he said. Ether daily chart (Source: TradingView) Ether is currently trading near $2,500, having reached two-month highs above $2,650 on Aug. 1, CoinDesk 20 data show.    Balani foresees ether rallying to $3,000 if bitcoin manages to secure a foothold above the long-held resistance of $40,000. The biggest cryptocurrency is priced about $38,250 at press time.    Read the original story here: Analysts Take Cautious Stance on Ether as London Hard Fork Nears The CoinDesk DeFi Index (DFX), benchmarking the investable DeFi sector, is now available for investors watching decentralized finance, the first true "sector" in cryptocurrencies. It is the latest index by CoinDesk Indexes, the market standard for crypto assets since 2014. The DFX provides a market-cap-weighted benchmark for a representative basket of DeFi-sector cryptocurrencies, composed of assets suitable for long-term holding. Find out more at coindesk.com/indexes/dfx, or email indexes@coindesk.com.  Technician's Take by Damanick Dantes, CMT Bitcoin Stuck Below $40K; Eyes Short-Term Oversold Bounce Bitcoin (BTC) buyers continue to struggle below $40,000 resistance as the short-squeeze rally fades. The cryptocurrency was trading around $38,000 at press time and is down 4% over the past week. Short-term oversold signals suggest the pullback could stabilize above $36,000 support. Bitcoin hourly price chart shows short-term support and resistance levels with RSI (Source: TradingView) The relative strength index (RSI) is rising from oversold levels on the hourly chart, which could encourage short-term buying. Upside appears limited towards $40,000 resistance as bitcoin remains in a consolidation phase. The daily RSI is declining from overbought levels with slowing momentum, although support could hold above $34,000 to $36,000.   Read the original story here: Bitcoin Stuck Below $40K; Eyes Short-Term Oversold Bounce A message from Worldpay Worldpay from FIS and Forter have teamed up to explore the evolution of the adoption of digital assets in the eCommerce industry, and how 21st century security measures can tackle the threat of fraud in card-to-crypto payments. Read the insights now BOLO Be on the look out for some of these upcoming events: 12:15 UTC (8:15 a.m. ET): ADP employment (July). Est: 653,000 14:00 UTC (10:00 a.m. ET): Governor Christopher J. Waller speaks to the American Enterprise Institute: Central Bank Digital Currency. Watch Live. The cryptocurrency movement has never been so sprawling, reaching every corner of the planet. Crypto State by CoinDesk aims to connect with local communities to explore this movement of financial disruption and how it trickles down to every corner of the globe, from DeFi investment opportunities to alternative ways to transact and store wealth. We're making virtual stops with audiences in Nigeria, the Middle East and Southeast Asia this year. Register for the Crypto State virtual tour. ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:   More Crypto Regulations? SEC Chair Scheduled to Speak on Crypto at Aspen Security Forum, Ethereum London Hard Fork Looms "First Mover" takes a look at the top stories that are moving the crypto markets Tuesday: SEC Chair Gary Gensler is eyeing robust crypto regulations, according to a Bloomberg report, and is scheduled to speak about digital assets at the Aspen Security Forum. Ethereum's London Hard Fork is around the corner. What can investors expect? Plus, the impact on the crypto industry from the new infrastructure bill that wants to raise $28 billion in crypto taxes. Lobbying group Chamber of Digital Commerce's Founder & President Perianne Boring joins the discussion. A Paradigm Shift in Mining The dynamic crypto mining industry has been even more active following China's crackdown. The global hashrate has largely shifted to North America, making the U.S. a key mining hub where institutions now take central stage. In this sponsored webinar on Aug. 10, Foundry CEO Mike Coyler explains how this new demographic of miners have special requirements, which the company has been catering to through its rapidly growing Foundry USA Pool and other services. Register for free. Latest Headlines New CoinDesk 20 List: MATIC Is In. XTZ, YFI and NU Are Out Introducing the new list of CoinDesk 20 assets for 2021 Q3. Bakkt, Quiznos Sandwich Chain to Launch Bitcoin Payment Pilot The crypto exchange and Quiznos will allow customers at select Denver locations to purchase items with the cryptocurrency. FTX Strikes 7-Year Deal With League of Legends' Riot Games Riot Games said it was the largest sponsorship agreement the League of Legends creator has signed for an esports tournament to date. BSV Suffers 51% Attack: Report The initial reorg affected as many as 100 blocks, experts say, and new reorgs are still occurring. Senator Rob Portman Defends Crypto Provision in US Infrastructure Bill Portman argues his "common-sense" provision will provide clarity for the crypto industry by standardizing information reporting of brokers. Rothschild-Founded RIT Capital Leads $8.8M Funding Round Into Aspen Digital Aspen aims to offer digital asset management to institutional and sophisticated investors. Global Precious Metals Retailer Kitco to Issue Gold-Backed Stablecoin Kitco Gold will be backed by physical gold stored in vaults and track the real-time market value of the yellow metal. Gemini to Custody Filecoin Fund of Australian Equities Manager to Further Asia Expansion The fund seeks to raise A$25 million ($18.4 million) over a three-month period, promising clients a 100% FIL return over five years. Google Allows Crypto Ads in US With Restrictions Firms must be registered with the U.S. Treasury's Financial Crimes Enforcement Network or a federal or state chartered banking regulator. Russia's Financial Monitoring Agency Wants to Identify and Profile Crypto Users Rosfinmonitoring will pay $200,000 for a tool to identify crypto users and see if they are involved in criminal activities. Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.  First Mover A newsletter from CoinDesk Copyright © 2021 CoinDesk, All rights reserved.  250 Park Avenue South New York, NY 10003, USA You can manage your preferences here or unsubscribe from all CoinDesk email.