JP Morgan analysts believe that the crypto market has begun to mature and has found a new, more stable bottom, reducing volatility and recovering investor sentiment.
The recent market recovery and the streak of minor gains that some cryptocurrencies, such as Bitcoin and Ethereum, are experiencing, have led the American banking giant, JP Morgan to suggest that The cryptocurrency market could have “found a new bottom”.
In a note sent to the entity's clients on August 8, market analyst Kenneth Worthington explained that recent changes in the sector, especially with the arrival of the upcoming The Merge upgrade to Ethereum, which will make the network go from Proof-of-Work to Proof-of-Stake, are causing the sector to mature, finding higher and more solid support levels.
On the other hand, the reduction of the consequences of the disaster caused by the fall of the LUNA ecosystem, has allowed the cryptocurrency market to make new gains, recovering more than a trillion dollars of total market capitalization and, at the same time, regaining the confidence of investors, institutions and markets.
On this point, the JP Morgan analyst points out that, having limited the consequences of the fall of LUNA and avoid further contagion, the cryptocurrency sector has demonstrated greater maturity, finding new trading floors despite the still bearish market context.
“However, we believe that the real driver has been The Ethereum Merge and the positive data after the launch of the merger in the Sepolia testnet at the beginning of July, as well as Ropsten tests in June, which indicate that it is feasible to carry out the merger in 2022,” Worthington explains to his clients.
The impact of the price of Bitcoin and Ethereum on the markets
For JP Morgan analysts, another indicator that the market has found a new bottom is the ability that Bitcoin and Ethereum have had to gain 36% and 102%, respectively, from the lows they reached in June.
On the other hand, since it was announced as possible date to implement The Merge on the Ethereum mainnet (on September 19), ETH has been immersed in strong bullish momentum, leading DeFi market gains after a disastrous first half of the year. In fact, JP Morgan believes that if the Ethereum merger is successful, the overall sentiment of the cryptocurrency market will radically change.
Ethereum leads the change in sentiment in the crypto market
Ethereum's bullish momentum has seen it reclaim the $1.800 level, although it has lost some traction and Right now it is trading at around $1.680. The impulse is due, in large part, to the interest of financial institutions in the merger and new network capabilities.
However, a part of the Ethereum community does not agree with The Merge and believe that Ethereum should remain a Proof-of-Work network. To this end, they are preparing the presentation of a proposal to carry out a hard fork that forks Ethereum into two blockchains, one that merges with the Beacon Chain and becomes Proof-of-Stake, and another that remains PoW.
For his part, Vitalik Buterin, who believes that the move to Proof-of-Stake and the implementation of layer 2 solutions can return Ethereum to its value as payment currency, and at the same time downplays these attempts and does not believe that a hard fork that splits Ethereum into two chains.
However, it is worth remembering that Ethereum has already suffered a hard fork in the past, resulting in the appearance of Ethereum Classic and Ethereum.
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