Ethereum leads the crypto market recovery

Ethereum (ETH) is leading the crypto market recovery. The price is up nearly 10% in the past seven days, while BTC is up 7.5%. 

The crypto market is recovering and Ethereum is showing the best returns

The overall capitalization of the crypto market is up 11%, led mainly by Ethereum’s growth and some rebounds. The fact is that the Merge is getting ever closer, prompting many speculators to buy ETH in anticipation of further rises. 

In addition, for the first time in 2022, ETH’s trading volume reached 50% of BTC’s, and it outperformed Bitcoin throughout July thanks to strong bullish inflows in both spot and derivatives markets. 

The average size of individual trades on the ETH/USD pair also increased in July, which suggests that major traders are reinvesting in ETH as sentiment picks up.

Market depth for the ETH/USD and ETH/USDT trading pairs also rebounded strongly.

These three trends suggest that traders have consistently rotated funds into ETH in recent weeks, likely in anticipation of the Merge and in the wake of the broader cryptocurrency market recovery. 

Overall, the price of ETH closed the month of July with one of the best performances among major cryptocurrencies, albeit far behind the +145% increase for Ethereum Classic (ETC).

Confirming the overall recovery could be the fact that the Curve 3pool returned for the first time to a liquidity profile similar to that before the implosion of the Terra ecosystem. This is one of the most systemically important stablecoin pools in the DeFi markets. 

In the days leading up to the collapse, the pool contained 24% USDT, 36% USDC, and 40% DAI, while on 18 May it had become 74/13/13. This imbalance continued through July, but in recent days the pool has returned to 26/38/36, although the TVL is still far below the May highs. 

The future of Ethereum after the Merge

It is safe to say that in July the crypto markets experienced a strong turnaround, led precisely by ETH with a 54% rise. BTC stopped at +20%. 

Not only is the anticipation of possible rises resulting from the September Merge attracting new capital to ETH, but it is also possible that some may want to buy ETH to hold in the event of a fork. 

In fact, with the Merge the current ETH tokens will actually be replaced with an equal number of ETH2 tokens, but there are already those who have announced that they want to fork the current Ethereum protocol to continue to mine the current blockchain even after the difficulty bomb has made it no longer viable. By forking they want to avoid the difficulty bomb in order to continue to mine blocks on the old blockchain, thus also keeping alive the current ETH1 tokens, which will be replaced with ETH2 tokens. 

Although the market value of the ETH1 tokens may collapse once the Merge is carried out, there are those who hope in this way to gain something by doubling the tokens, albeit with different counter values in fiat currency. Therefore, there are also those who are buying ETH to hold until the potential fork.