The latest news about crypto, blockchain and Defi

After a week-long halt in the publication of this letter due to the author’s summer vacation, we are back at the beginning of August under a much less gloomy sky than during our last broadcast. While the macroeconomic issues that drive all markets have apparently not changed at all in two weeks, it is clear that investors are beginning to believe in the interventionist success of central banks in their ability to slow the economy to curb inflation. Indeed, such a slowdown is welcomed and lends confidence to positioning in anticipation of the next cycle.

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While it is true that the US economy is technically now in recession following the release of gross domestic product (GDP) data showing growth declining for the second consecutive quarter, one cannot say that the economy is in crisis, in at least right now. US employers added 372,000 jobs in June, suggesting there is still enough capital in the economy to expand businesses. Janet Yellen, Secretary of the US Treasury, has also stated that in previous periods of recession the labor market lost a significant number of jobs, which is not the case currently. Certainly, she said, the economy is experiencing a “significant slowdown in growth,” but there are also “big forces” playing out on the side.

Immediately after our last communication, we learned that Tesla had sold 75% of its cash in bitcoins. If the announcement of this investment had once caused prices to explode, the sales were rather indifferent. Despite a temporary drop, bitcoin found its share of buyers at the same level as in recent weeks to quickly stabilize. We won’t be saddened by the increasingly muted effects of Musk’s comments on the cryptocurrency market.

We talked to you two weeks ago about the importance of the 200-week moving average (red line) for bitcoin and how the close above after breaking through it has always led to a subsequent bull run. We thought we were close then, but the penultimate week of July ended up closing just below this indicator. However, the week ending Sunday managed to close north of this line, giving hope that it will now serve as strong support for the future. We can see that the way seems open for a bullish push up to around $26,500, where the 200-week EMA is located (yellow line).

Also note that July was the best month of 2022 for bitcoin. It was the same for Ether, with higher returns for the latter.

As of next Monday, Michael Saylor will no longer be CEO of MicroStrategy. The company that had a large loss on the balance sheet in 2e quarter with its bitcoin treasury will now hand over this role to the company’s current president, Phong Le. Don’t think this is a departure from business for Saylor, though. On the contrary, the latter says that he welcomes this transition to his future position as CEO, which will allow him to devote even more time to the company’s bitcoin and crypto treasury. “I will remain an officer of the company and chairman while serving as chairman of the investment committee and leading our bitcoin acquisition strategy,” Saylor said on the conference call. The company’s results for the second quarter of 2022 Tuesday. “I focus on bitcoin advocacy and education, such as with the Bitcoin Mining Council, and my role as an advocate and ambassador for the global bitcoin community.”

This is reminiscent of the recent words of Jack Dorsey, co-founder of Twitter and Square, who admits to having made the adoption of bitcoin his top priority. “Bitcoin changes absolutely everything. I don’t think there is anything more important in my life to work on,” he said recently.

Why not take the opportunity to remember all the resilience of the blockchain, since bitcoin is the monetary network with the operating time (up time) the highest and constant. It is its decentralization that explains it compared to centralized payment systems. The network is calculated to have an access availability of 99.987%. The last shutdown lasted 6.5 hours 3423 days ago, or about 9.3 years. In short, bitcoin has offered the ability to trade anywhere in the world for almost 10 years, without any middleman, at ridiculously low costs, without the slightest downtime. There is no financial system in the world that comes close to such a feat. This is another demonstration of the revolution brought by blockchain.

Speaking of blockchain, the Ethereum network is indeed approaching a crucial turning point in its existence. The final Ethereum Testnet merger is scheduled for early August. “Goerli” will be the network’s third and final testnet before the chain transitions to proof-of-stake, which is scheduled for mid-September. Between August 6 and 12, the Goerli test network is expected to merge with Prater, its associated coordination chain. The coordination chain (Beacon chain) main is the proof-of-stake version of Ethereum that has been running alongside the current proof-of-work Ethereum network since December 2020. The last two such tests have been successful.

Keep in mind that the 2.0 chain eliminates the need for miners. Instead, the validators, who can be anyone as long as they pledge at least 32 ETH or join a common pool of validators, will ensure network security by locking the network’s cryptocurrency. Ethereum’s energy efficiency will be improved by about 99%, according to the Ethereum Foundation. The bottom line, and what some investors and analysts are currently so optimistic about, is that this transition has inherent reasons to lead to a significant increase in prices. In fact, by requiring ETH currently in circulation to be blocked in order to issue new ETH, the process could have a deflationary effect on the cryptocurrency. If ETH supply growth can slow down while demand for the crypto remains high, this could have a positive impact on the price. At least that is the perception of speculators who stock Ether and benefit from its outperformance against bitcoin. This is also the case with Rivemont’s crypto fund.

Proof of the enthusiasm, the domain registrations of The Ethereum Naming Service reaches an all-time high as the merger approaches. Over 1.8 million ENS domain names have been registered and adoption by non-English speaking communities is increasing.

Is this migration the end of the network? The creator of Ethereum, Vitalik Buterin, reminds us that this is far from the case. The merger is just a development step that brings the network to 55% completion, he claimed at an Ethereum conference in France at the end of July. After the “merger”, Ethereum will undergo further upgrades, which it calls “surge”, “verge”, “purge” and “splurge”. While the names may sound cartoonish, these steps are actually important parts of scaling, cleaning and developing Ethereum, Buterin said.

The “wave” refers to the addition of cutting of Ethereum, a scaling solution that will enable low-cost Tier 2 solutions, reduce the cost of rollups or bulk transactions, and to make it easier for users to operate the nodes that secure the Ethereum network. ETH can only process 20 transactions per second right now. After this future step, we are talking about 100,000 second transactions.

The “rod” will implement what Buterin calls “Verkle trees”, which represent a form of mathematical proof. These technical improvements will allow users to become network validators without having to store large amounts of data on their machines. According to Buterin, it is this step that will allow true decentralization.

The “cleansing” will simply seek to reduce the amount of space you need on your hard drive, try to simplify the Ethereum protocol over time and not require nodes to save their history.

“Splurge”, finally? A much smaller technical step. “All the rest of the fun,” Buterin explains with a laugh. In short, everything the network will be able to allow, including what may not even be thought of yet.

The fund’s capital has been fully exposed over the past few weeks. Our positions in ETH, MATIC and UNI gave a higher return than bitcoin during the period. Note that the fund has a position in SAND, which has been relatively stable since our entry.

This article is brought to you by Fonds Rivemont. Rivemont’s crypto fund is the first and only actively managed cryptocurrency fund in Canada. RRSP and TFSA eligible. Accredited investors can learn more here.

Disclaimer: This column does not necessarily reflect the opinion of CryptonewsFR and does not constitute investment advice or trading instructions..

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