FTX to halt Ethereum trades on Arbitrum, Solana, BSC for the ETH Merge

September 5, 2022 Coin Telegraph

Despite confirmation of zero downtime from Ethereum developers, FTX chose to suspend “deposits and withdrawals until the Merge is finished and networks are stable.”

While Ethereum devs promised no downtime during The Merge, one of the most anticipated Ethereum upgrades, members of the crypto community decided to take proactive measures to ensure the safety of investor funds. In this effort, crypto exchange FTX announced to halt all Ether (ETH) trades on various blockchains until the September upgrade concludes.

The Merge upgrade will permanently transition the Ethereum blockchain from proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism — aimed at reducing energy consumption and introducing sharding capabilities.

According to Ethereum developers, the Merge is designed to transition to PoS with zero downtime owing to the terminal total difficulty (TTD), which will ensure the transition based on the total mining power that goes into building a chain. Despite the explanation, FTX chose to suspend “deposits and withdrawals until the Merge is finished and networks are stable.”

As the ETH merge approaches, FTX will temporarily disable blockchain transfers of secondary chains for ETH to make sure that settlement is clean; main chain ETH transfers will stay active for longer.

Details: https://t.co/iVUjo4ZqyO
— FTX (@FTX_Official) September 5, 2022

The trade suspension for Ethereum on various blockchains has been assigned to commence at different times but remains subject to change based on anticipated complications.

*FTX's official timelines for halting ETH trades. Source: FTX*

FTX also pointed out that the crypto exchange is not liable for any losses in case of large price fluctuations, adding that “It is your responsibility to understand the implications of this announcement.”

Clarifying one of the biggest misconceptions tied to The Merge, Ethereum Foundation clarified that the upcoming upgrade will not reduce gas fees. The official statement reads:

"Gas fees are a product of network demand relative to the network's capacity. The Merge deprecates the use of proof-of-work, transitioning to proof-of-stake for consensus, but does not significantly change any parameters that directly influence network capacity or throughput."

Instead, the upgrade aims to purely eliminate the need for energy-intensive mining.

Ethereum Co-Founder Vitalik Buterin Discusses Bitcoin’s Long-Term Security

September 4, 2022 Bitcoin.com

Surge or purge? Why the Merge may not save Ethereum price from ‘Septembear’

September 3, 2022 Coin Telegraph

Coin Telegraph

Options data, macroeconomic catalysts and technical signals suggest a decline in Ethereum price is on the table despite the Merge.

Ethereum's native token, Ether (ETH), is not immune to downside risk in September after rallying approximately 90% from its bottom of around $880 in June.

Much of the token's upside move is attributed to the Merge, a technical upgrade that would make Ethereum a proof-of-stake (PoS) protocol, slated for Sep. 15.

But despite logging impressive gains between June and September, Ether still trades almost 70% below its record high of around $4,950 from November 2021. Therefore, its possibility of heading lower remains on the cards.

*ETH/USD weekly price chart. Source: TradingView*

Here are three Ethereum bearish market indicators that show why more downside is likely.

Sell the Ethereum Merge news

Ethereum options traders anticipate Ether's price to reach $2,200 from its current $1,540 level ahead of the Merge, according to Deribit data compiled by Glassnode. Some even see the price hitting $5,000, but enthusiasm looks flat post the PoS switch.

There appears to be demand for downside protection among traders after the Merge, indicated by a so-called "options implied volatility smile" metric (OIVS).

OIVS illustrates the options' implied volatilities with different strikes for the specific expiration date. So, contracts out of capital typically show higher implied volatility, and vice versa.

For instance, in the Ethereum's Sept. 30 options expiry chart below, the smile's steepness and shape help traders assess the relative expensiveness of options and gauge what kind of tail risks the market is pricing in.

*Ethereum OIVS for the contract expiring on Sept. 30, 2022. Source: Glassnode*

Thus, it shows a large buy-side demand for ETH call options expiring in September, indicated by the volatility smile's upward slope, showing traders are willing to pay a premium for a long exposure.

“Post Merge, the left tail is pricing in significantly higher implied volatility, indicating traders are paying a premium for ‘sell-the-news’ put-option protection post-Merge,” Glassnode analysts wrote, citing the OIVS chart below that also features Call and Put open interests at different strike rates.

*Ethereum OIVS for the contract expiring on Oct. 28, 2022. Source: Glassnode*

In other words, ETH traders are hedging their bets in case of a sell-the-news event.

Hawkish Federal Reserve

More downside cues from Ethereum come from its exposure to macroeconomic events, mainly quantitative tightening by the Federal Reserve.

Last week, Fed Chairman Jerome Powell reiterated the central bank's commitment to curbing inflation, noting they "must keep at it until the job is done." In other words, Powell and his associates would likely raise interest rates by 0.5%-0.75% in their next policy meeting in September.

Rate hikes have recently been bad news for the ETH/USD pair, given the growing positive correlation between a broader crypto sector and traditional risk-on indices against the prospects of declining cash liquidity. For instance, the daily correlation coefficient between ETH and Nasdaq as of Sep. 3 was 0.85.

*ETH/USD and Nasdaq daily correlation coefficient. Source: TradingView*

Therefore, the possibility of Ether declining alongside riskier assets is high, particularly if the Fed hikes by 0.75%.

That giant Ether "bear flag"

From a technical perspective, Ether is painting what appears like a bear flag on its weekly chart.

Bear flags appear when the price consolidates higher inside an ascending parallel channel after a strong move downward. They resolve after the price breaks out of the channel to the downside and, as a rule of technical analysis, falls by as much as the previous downtrend's length (flagpole).

Ether tested the bear flag's lower trendline as support this week. From here, the Ethereum token could either rebound to retest the flag's upper trendline (~$2,500) as resistance or break below the lower trendline to continue its prevailing bearish trend.

Given the factors discussed above, the ETH/USD pair risks entering the bear flag breakdown stage in September, as illustrated in the chart below.

*ETH/USD weekly price chart featuring 'bear flag' setup. Source: TradingView*

Therefore, ETH's bear flag profit target comes to be near $540 in 2022, down approximately 65% from today's price.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Total Ethereum (ETH) Staked Sees Over 100% Increase in Year Leading Up to the Merge: Crypto Analytics Firm

September 2, 2022 The Daily Hodl

Ethereum to $2K? ETH price ‘bull flag’ hints at September gains versus Bitcoin, dollar

August 31, 2022 Coin Telegraph

Bitcoin

Ether is forming classic bullish patterns against the greenback and its top crypto rival on shorter-timeframe charts.

Ethereum's native token, Ether (ETH), looks ready to grow stronger compared to the U.S. dollar and Bitcoin (BTC) in the days leading up to its proof-of-stake transition in September.

ETH price chart bullish setup

The bullish outlook emerges from classic technical indicators on ETH/USD and ETH/BTC charts. For instance, ETH/USD has been forming a "falling wedge" pattern with a profit target sitting around 30% above the current prices.

Meanwhile, the ETH/BTC chart is painting a potential "bull flag" that could increase the price by approximately 10% from current price levels upon resolution.

Here's how these bullish setups could play out.

Ethereum to $2K next?

Falling wedges form when the price trends lower inside a descending, contracting channel.

*Falling wedge illustration. Source: New Trader U*

They typically resolve after the price breaks above their upper trendlines. Their breakout target is as high as the maximum distance between their upper and lower trendlines when measured from the breakout point

ETH's price has been decreasing since mid-August in a falling wedge pattern. It recently rebounded after testing the structure's lower trendline to hit the upper trendline and now eyes a breakout toward or above $2,000, as shown below.

*ETH/USD daily price chart featuring falling wedge breakout setup. Source: TradingView*

The wedge's profit target coincides with Ethereum's 200-day exponential moving average (200-day EMA; the blue wave) at $2,055.

Moreover, the target appears to be a junction as ETH eyes an extended bull run toward $2,500. This level is the upside target of a broader ascending channel (the purple range) that has been forming since June.

In other words, ETH's price could grow anywhere by 30%-55% in September.

ETH/BTC bull flag setup

Bull flags surface when the price consolidates lower inside a descending, parallel channel after a strong upward move.

*Bull flag illustration. Source: ThinkMarkets*

The pattern resolves after the price breaks above its upper trendline, followed by an extended upside move toward the level at length equal to the size of the previous uptrend, also called flagpole. As a result, analysts call bull flags "bullish continuation" patterns.

Ether has been forming a bull flag against Bitcoin since early August, awaiting breakout as it tests the structure's upper trendline for one. Suppose it happens, then the price could rise toward 0.087 BTC, up approximately 10% from today's price.

*ETH/BTC daily price chart featuring bull flag breakout setup. Source: TradingView*

Alternatively, ETH/BTC could flip lower to retest the flag's lower trendline. This trendline appears to be coinciding with a support confluence consisting of a 50-day EMA (the red wave) and the 0.618 Fib line at 0.0729 BTC.

The pullback will not invalidate the bull flag breakout setup unless the price breaks below the lower trendline. But if it does, ETH/BTC risks falling toward $0.088 BTC, a level synchronous with the 0.5 Fib line and the 200-day EMA (the blue wave).

Will Ethereum 2.0 be vulnerable to censorship? Industry professional explains

August 31, 2022 Coin Telegraph

Censorship

Ryan Berckmans, an Ethereum community member and investor, discussed the potential consequences that the Tornado Cash ban could have on the future of the network.

The Ethereum network will be able to withstand censorship risks both in the short and long term, according to Ethereum community member and investor Ryan Berckmans.

The ban of Ethereum-based privacy tool Tornado Cash by U.S. authorities earlier this month left many wondering whether Ethereum transactions could be also at risk of censorship, especially after Ethereum’s imminent transition to a proof-of-stake system.

A widespread concern is that entities controlling a large chunk of staked Ether (ETH), such as Coinbase or Kraken, would start censoring transactions to comply with U.S. sanctions. That is an unlikely scenario, according to Berckmans, who sees the high centralization of staked ETH as a temporary issue.

With time, the costs of entry to the staking business will drop due to the “maturity of open-source tools and industry expertise as well as the generally reduced risk profile,” said Berckmans. That will allow more and more players to enter the staking business, thus reducing the dominance of large staking pools.

“The idea that these will be able to somehow sustainably censor user transactions or affect the fork choice in Ethereum, it’s just not a credible idea,” Berckmans pointed out.

Moreover, according to Berckmans, the Tornado Cash ban in the United States was a policy mistake that is unlikely to result in more government sanctions. He said that U.S. policymakers are likely to acknowledge the mistake and take a more favorable approach to Ethereum, which is “inherently aligned with America’s interests.”

“Ethereum is about permissionless innovation, free enterprise, property rights, globalization,” Berckmans explained.

Check out the full interview on our YouTube channel, and don’t forget to subscribe!

Buterin and Armstrong reflect on proof-of-stake shift as Ethereum Merge nears

August 31, 2022 Coin Telegraph

Brian Armstrong

Two influential figures in the cryptocurrency space unpack their individual journeys to understanding the promise of proof-of-stake as The Merge approaches for Ethereum.

Ethereum co-founder Vitalik Buterin and Coinbase CEO Brian Armstrong believe that a gradual mind shift and important community contributions led to their backing of Ethereum’s upcoming move from a proof-of-work (PoW) to proof-of-stake (PoS) consensus.

The two industry titans joined Coinbase protocol specialist Viktor Bunin on the Around the Block podcast for an enlightening discussion centered on The Merge, which is set to take place in mid-September 2022.

Buterin reflected on his history of considering proof-of-stake as a potential consensus mechanism for the Ethereum blockchain, which was initially met with skepticism due to a number of unsolved problems that made it seemingly unviable.

According to the Ethereum co-founder, one of his the project's first blog posts in 2014 proposed an algorithm called slasher which introduced the concept wherein a node would be penalized for voting for contradicting actions:

“This was my attempt at making inroads in solving what proof-of-stake critics call the ‘nothing-at-stake’ problem. In proof-of-work if you want to build on top of two blocks you have to do double the work but in proof-of-stake you can just sign as many things as you want.”

Buterin believed that introducing an explicit penalty for signing contradictory actions would be a viable option. Research continued through 2014 to explore the security assumptions that Ethereum would have to rely on with PoS and if it could be more secure than PoW by making slashing penalties eat into staked deposits rather than staking rewards.

Buterin then reflected on a concept introduced at the end of that year called “weak subjectivity.” He explained that in order for a PoS network to benefit from the full security guarantee of the mechanism, a node has to be online at fairly regular intervals.

This could be every week, month, or year, with longer time periods becoming more inconvenient for stakers from a liquidity perspective. Buterin believes this was the critical consideration that set his mind on the transition to PoS:

“Ironically enough for me, it was realising that that was an unavoidable tradeoff that actually made me comfortable with it. It made me realise that this is the weakness and at the same time I felt confident that it’s all that there is.”

Armstrong entered the conversation, admitting that he had reservations about PoS when he first heard about it and it took a couple of years to change his perspective:

“When people started talking about a Turing complete language on a blockchain, I was like this sounds so easy to attack and so I was initially just skeptical.”

The Coinbase CEO began to explore the concept again after explaining that his initial belief that Bitcoin would serve as the main blockchain in the ecosystem had its limitations. The success of decentralized applications (Dapps) running on Ethereum led Armstrong to have a more open mind around the transition to PoS:

“Just seeing Vitalik make progress on it and the Dapps that were coming out, we eventually came round to the idea at Coinbase that we’re going to have to be agnostic to every chain and token that is coming out, we can’t sit here in our ivory tower only focused on one asset.”

Buterin went on to unpack his belief that PoS is more robust and decentralized than PoW, with the ability for an Ethereum validator to be set up anywhere in the world. An individual only needs a computer and an internet connection to do so.

The pair also weighed in on the United States Treasury's move to sanction USD Coin (USDC) and Ether (ETH) addresses connected to Tornado Cash, while also noting that Coinbase would rather stop its staking operation to preserve the integrity of the overall network in the hypothetical situation that it was required to censor transactions.

Ethereum miner balance reaches four-year high weeks before the Merge

August 31, 2022 Coin Telegraph

Coin Telegraph

Experts believe that miners are hoarding more ETH in anticipation of price surges and forked PoW tokens.

The Ethereum Merge is slated for Sept. 15, which will see the Ethereum blockchain move from its current proof-of-work (PoW) mining consensus to proof-of-stake (PoS).

The Merge is being touted as one of the biggest upgrades for the Ethereum blockchain as it would help the network move to a more energy-efficient way of verifying transactions and eliminate PoW mining completely. With the Merge date approaching, Ether (ETH) miner's balance has touched a new four-year high.

According to Oklink data, the balance of Ethereum miner addresses exceeded 260,000 ETH with a total of 261,848 ETH valued at over $415 million at the current price. Miner accumulation reached a new four-year high with similar levels seen last in April 2018.

*ETH Miner Address Balance Source: Oklink*

Miners' growing accumulation of ETH has been attributed to a few factors, the first being anticipation of a price surge in the wake of the key upgrade. While many pundits have called the Merge a “buy the rumor and sell the news” kind of event, miners' accumulation indicates growing bullish sentiment.

Another major factor is the hard fork. The majority of the ETH miners are in favor of a hard fork to keep the PoW chain alive and continue mining. Thus, in case of a hard fork, these miners holding onto ETH would also receive an airdrop of the forked token. While the value of the forked token might not appreciate in tune with the main ETH chain, however, it would still ensure additional capital.

A forked PoW token has got the backing of a few leading crypto exchanges like Bitfinex while the likes of Binance have said that if the demand for the forked token would be big enough, they would not mind listing it.

Yohannes Christian, Research Analyst at leading crypto exchange Bitrue, told Cointelegraph:

”The ‘Difficulty Bomb’ will make mining unprofitable after the Merge. Before this happens, miners are exploring all avenues to cart away with as many Ether as they can while they still have the time.“

“As such, more computing resources are being committed to the mining of Ethereum and this accounts for what has translated to a very high miner balance,“ he added.

The Merge has created a dilemma of sorts for the miners as the move would eliminate PoW mining completely, but keeping the PoW chain alive via a hard fork won’t guarantee an appreciation in price with the majority of the community already supporting the main PoS chain.

Largest Ether mining pool Ethermine opens new ETH staking service

August 31, 2022 Coin Telegraph

Coin Telegraph

The new service offers Ethermine members a chance to collectively stake their ETH and earn 4.43% interest annually on top of their ETH deposits. As little as 0.1 ETH ($159) required to enter.

Ahead of the rapidly approaching Ethereum (ETH) Merge on Sept. 15, Ethermine, the world’s largest Ethereum mining pool has unveiled a new staking pool for users. Notably however, it is not available to U.S. miners

The new service offers Ethermine members a chance to collectively stake their ETH and earn interest on top of their deposits. As little as 0.1 ETH ($159) required to enter. However the smaller the holding, the greater the fee. The platform is currently offering stakers an annual ETH interest rate of 4.43%.

At the time of writing, 393 Ether worth roughly $626,000 at current prices has been invested into Ethermine's new pool.

Staking pools such as these hold significance as they offer competitive interest rates and a lower barriers of entry than solo staking as node operators, which requires at least 32 ETH ($51,000) to operate a node. In comparison, to Ethermine's interest rate, staking on Ethpool as a node operator garners an annual interest rate of 4.6%.

The switch to offer staking is something of a pivot for Ethermine which currently operates as a multi-currency mining pool, allowing users to mine ETH, Zcash, Ethereum Classic (ETC), Beam (BEAM), Ravencoin (RVN) and Ergo (ERGO).

After the merge, ETH mining will be phased out as the network changes from a proof of work (PoW) mining model to proof-of-stake (PoS) staking model.

At time of writing there are 222,657 active miners on Ethermine that account for a combined hash rate of 261.1 terra hashes per second (TH/s). After Sept. 15 the pool will only continue to support the PoW mining of Ethereum Classic (ETC), Ravencoin (RVN), Ergo (ERGO), and Beam (BEAM).

End of the Mining Era

Miner dashboards will have a Merge countdown clock and minerscan keep mining ETH up until the timer hits zero.

ETH miners will soon be replaced with PoS validators, which could help cut the ETH network consumption by 99%.

However, some in the ETH miner community have pushed to keep the current PoW consensus mechanism because the shift will make their high powered and costly mining rigs redundant.

Other high profile members of the crypto community have also been critical, arguing the changes will cause negative impacts beyond the loss of mining.

The current PoW system is an energy intensive process where miners harness large amounts of computer power to solve complex puzzles, validate transactions and earn ETH rewards.

Under the PoS model, participants or validators lock up set amounts of cryptocurrency in a smart contract on the blockchain; their stake helps secure and decentralize the network.

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August 28, 2022 Bitcoin.com

Proof-of-Stake