Ether surpasses Bitcoin on London Hard Fork

Ether, the second-largest cryptocurrency by market cap, was in the spotlight on Thursday during the latest hard fork upgrade, dubbed “London,” officially activated on the Ethereum blockchain network. The upgrade contributed to bullish price action, with Ether rising around 5% in the past 24 hours, compared to a 3% increase in bitcoin over the same period.

Despite the ETH rally, some analysts expect widespread institutional adoption to take a few years. Institutional interest has fueled the attractiveness of bitcoin investing over the past year, which has helped crypto rally in the fourth quarter of 2020.

“I think Ethereum could reverse bitcoin’s market cap in the long run, but not this year,” said Ki Young Ju, CEO of CryptoQuant, in an interview with WuBlockchain.

“I met Goldman Sachs, Fidelity and other large institutional asset management firms in Miami a few weeks ago and they said they still have a hard time explaining what Ethereum / DeFi is (finance decentralized) to their bosses, ”said Ju.

Meanwhile, some institutions remain active in the crypto market, either directly or indirectly. On July 22, Fidelity Investments acquired a 7.4% stake in cryptocurrency miner Marathon Digital Holdings for approximately $ 20 million.

French asset manager Melanion Capital obtained regulatory approval to launch an exchange-traded fund (ETF) on Thursday that tracks the price of bitcoin and several crypto-related stocks.

Also on Thursday, Invesco, a US-based asset manager, filed an application with the US Securities and Exchange Commission (SEC) to list an ETF with indirect exposure to bitcoin through futures contracts and other investment vehicles.

Large institutions are entering the crypto market with a bitcoin-based approach. However, it will likely be some time before investors fully embrace altcoins such as Ether, as regulatory hurdles need to be lifted first.

The ether was initially stable after the activation of the London hard fork, but began to rally around an hour later. At the time of publication, Ether was changing hands at around $ 2,807, down from around $ 2,600 just before the changes took effect, according to data from CoinDesk 20.

Many crypto traders are focusing on a component of the upgrade, called Ethereum Improvement Proposal (EIP) 1559, which changes the network’s fee structure so that a certain amount of the cryptocurrency supply is ” burnt ”or withdrawn from circulation. The bet is that the blockchain’s net issuance of new cryptocurrency units will slow down due to the change, ultimately helping to set a floor below the price.

Analysts from Stack Funds and elsewhere have compared the London hard fork and the implementation of EIP 1559 to the Bitcoin blockchain halvings that occur every four years in the sense that major changes in growth of the cryptocurrency supply are deployed at specific points in the blockchain lifecycle. Some investors believe that Bitcoin halving events in the past have helped push the price of the underlying cryptocurrency up.

As of 3:06 p.m. UTC, some 585 ETH fees had been burned, or about 43% of the block rewards issued since the Ethereum hard fork went into effect at data block # 12,965,000, according to the Ultrasound website. money.

Ether is now above the 100-day moving average for the first time since June. The price rally broke through a significant technical hurdle, although price may find some resistance at the $ 3,000 level.

The ETH rally outperformed bitcoin after a few months of consolidation. The ETH / BTC ratio is testing initial resistance at 0.06, but could rise further as momentum improves.

Similar to stocks, bitcoin is approaching a period of seasonal weakness, which could encourage buyers to take profits. The table below shows, on average, relatively low returns in August over an eight-year period. September tends to be the worst month. Purchases resume in October and February.

Seasonal trends can vary, especially as bitcoin moved away from its historical trends when it fell in May.

According to Delphi Digital, a research firm that focuses on digital assets, margin assets for bitcoin futures trading have shifted from bitcoin to stablecoins. The change has become particularly significant as open interest with cash margin soared after the bitcoin price fell in May.

“The most important implication of this is that buyers do not have the added benefit of holding both BTC and BTC spot futures while they rise, but they are no longer exposed to losses. larger when their position turns against them (because their margin is in stablecoins, not BTC), ”Delphi wrote.“ For shorts, they can profit from downtrends without their margin value eroding, but they lack protection when BTC goes up. “

Notable 9:00 p.m. UTC (4:00 p.m. ET) winners: