Ethereum and Polygon drive the crypto market- The Cryptonomist

In the past 24 hours, the price of ETH (Ethereum) has risen nearly 7%. Right now it is at +24% compared to a week ago. 

For MATIC (Polygon) the result is even more resounding: +14% in the last 24 hours and as much as +55% in the last week. 

Bitcoin’s price, on the other hand, is up only 3% in the last 24 hours, and 6% in the last week. 

Overall, the market capitalization of cryptocurrencies is back above $1 trillion, whereas last Wednesday it had fallen below $900 billion. 

Right now it is Ethereum that is driving the crypto market upward, with Polygon making the biggest gains among the top 100 cryptocurrencies by market capitalization. 

It is possible that the news regarding the possibility of a Merge between the new PoS-based Beacon Chain, and Ethereum’s old PoW-based blockchain, shortly after mid-September, is generating some optimism around Ethereum and one of its main second layers (Polygon). 

It is also very interesting to examine recent changes in the ratio of BTC’s market capitalization to that of ETH. 

Before the implosion of the Terra ecosystem, this ratio had fallen close to 2, but when the problems began it rose back up to over 3 on 18 June. Indeed, oftentimes when there is panic in crypto markets investors take refuge in BTC, abandoning altcoins. 

However, starting on 13 July the trend reversed again, so that within just six days the ratio fell below 2.4. This latest downward trend is not attributable to a loss in value of BTC, but rather to a greater increase in value by ETH. 

At a time when there no longer seems to be any real panic in the crypto markets, the prospect of the Merge in September is temporarily generating optimism around Ethereum. 

This dynamic emerges especially when analyzing ETH’s Relative Strength Index (RSI). From 11 to 22 June it had been consistently in oversold territory for twelve days in a row. 

Since 23 June it had risen first above 20, and since 15 July even above 50. Yesterday it also rose above 64, which is not far from 70 above which it would enter overbought territory. 

At this point, the question arises whether the optimism that is spreading about Ethereum is excessive. Given that the price has merely returned above $1,400 for now, which is the value it had before the mid-June crash, it does not seem we can already speak of over-optimism. Moreover, the news regarding the possibility of the Merge in September seems reliable, so some optimism at this stage remains justified. 

It is worth recalling that last year there were three summer crashes in the crypto market, one in May, one in June, and one in July. This year, with the exception of the physiological drop in the first months of the year, there have been only two, one in May and one in June.