Simon Peters, cryptoasset market analyst at multi-asset investment platform eToro, says: Bitcoin surges to $50,000 and Dencun goes live on Ethereum
After seeing some consolidation the week prior, the bitcoin price rallied last week gaining 13%. The positive momentum has carried over to this week. Currently bitcoin is trading at $49,580 on the eToro platform.
Spot ETF inflows could be one of the reasons for the price increase. We’ve seen 11 consecutive days of net buying across the SEC approved bitcoin spot ETFs since 25th January, when the bitcoin price was around $40,000 at the time.
With Ethereum, we saw the activation of the much anticipated ‘Dencun’ upgrade on the final testnet Holesky. After a successful activation on Holesky, we now have a date of 13th March for the upgrade to go live on the Ethereum mainnet. More about Dencun further on in the newsletter. Currently ether is trading at $2,630 on the eToro platform.
THE WEEK AHEAD
Focus switches back to macroeconomics this week as the latest US CPI print is set to be released on Tuesday 13th February.
Although the Federal Reserve has pretty much ruled out a cut to interest rates at the next meeting in March, a CPI print lower than forecast could really get markets believing that a cut could happen at the following May meeting.
As we’ve seen historically, increased anticipation of rate cuts, falling bond yields and general loosening of financial conditions has generally been positive for cryptoasset prices.
LAST WEEK’S MOVERS
Ethereum Name Service (ENS) was one the best performing cryptoassets last week, gaining 18%.
ENS is a project built on the Ethereum blockchain which aims to simplify the crypto and decentralised finance space by allowing users to have an .eth name for crypto wallet addresses, replacing the complex long character string address format, in turn making it easier for users to send and receive crypto.
The price move follows an announcement from Executive Director Khori Whittaker that ENS is researching ways to build on Ethereum layer 2 networks, as well as potentially launching its own layer 2 blockchain.
Chinese bitcoin mining companies attracted to Ethiopia’s cheap electricity
As reported by Bloomberg, Ethiopia has emerged as a prime hub for displaced Chinese bitcoin miners due to cheap electricity costs and optimal climate conditions for operating mining rigs.
Ethiopia’s capacity to supply electricity for mining bitcoin may rival that of Texas, the biggest hub for crypto mining in the US, in a few years, according to a senior executive at Bitmain.
Several Chinese companies have also helped build the $4.8 billion Grand Ethiopian Renaissance Dam (GERD), the largest hydroelectric power plant in Africa, which the miners plan to draw their power from.
At its peak, Chinese bitcoin miners accounted for between 65% to 75% of the total “hash rate” or overall computing power of the bitcoin network.
Ethereum Dencun upgrade to go live on mainnet 13th March
Ethereum core developers have set a date of 13th March (blockchain slot 8626176 to be precise) for activation of the Dencun upgrade to the mainnet.
Dencun introduces a number of EIPs (Ethereum Improvement Proposals) and marks the start of ‘The Surge’ era on Ethereum, aimed at increasing the scalability, security and efficiency of the network. The upgrade is also set to significantly reduce transaction (gas) fees on layer 2 networks within the Ethereum ecosystem through EIP 4844 Proto-Danksharding.
Ethereum will be a crypto to watch over the coming months. Dencun could bring increased usage of the Ethereum network, with in turn could be positive for the ethereum cryptoasset price.
Not to mention May this year where we will see the final approve or deny deadline for the spot ethereum applications. Like we saw with bitcoin, when the approval of the spot bitcoin ETFs looked likely, the bitcoin price rallied significantly.
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