The crypto market is falling — but here’s one hopeful prediction

Since Ethereum transitioned to the new PoS algorithm, the market has seen two contradictory trends. Fundamental analysis shows the market is falling, while technical analysis predicts it will be rising. We take a look at these two trends in this article to see what’s going on.

Fundamental Analysis

At the moment, we see a severe fall in the market to the level of about $18k per bitcoin. The market drop happened yesterday:

There are two main reasons for this:

• Many investors are taking their profits after The Merge ended. In expectation of Ethereum growth, many invested in this altcoin, and only yesterday, the exchanges unblocked the withdrawal, making it possible to close the position (for the last few days, Ethereum transactions were blocked for technical reasons due to the ongoing merger). Seeing the rather low market, most investors decided to sell the cryptocurrency, which caused a noticeable market dump.
• The second important technical factor, which we wrote about a day ago, is Ethereum centralization, unexpected for many, as a side effect of the transition to PoS (which frightened many supporters of this network). This effect was an unpleasant surprise, and many were tempted to write it off as a wrong analysis from the Santiment agency. But a new batch of analytics came to the market, confirming what was said before (more about it below).

Both of these factors stimulate ETH price fall, which negatively affects the whole cryptocurrency market. 

A new centralization factor

More and more evidence is being found of Ethereum centralization threatening the stability of validators. Yesterday, the BitMex exchange added to these allegations by posting statistics from mevboost.org.

According to that data, 75% of blocks are collected from transactions picked up in the meme pool by a centralized service called Flashbots. This robot helps miners, and now validators, extract Miner Extractable Value (MEV), the extra profit from some sort of transaction ordering.

The race for MEV leads to unprofitable exchange rates for DEX exchanges, destabilizing the consensus. In essence, miners deliberately split the network to build up a longer chain to wire “their” blocks ahead of competitors.

Ethereum blockchain consensus type conversion has not solved the MEV problem, and the dominance of the Flashbots service represents a single point of failure for the entire network. 

Previously, analysts from Santiment proved that 46.15% of nodes are controlled by just two addresses. All this makes experts critically rethink Ethereum’s reliability, in which PoS does not solve its most important problems (and in the worst case, on the contrary — only strengthens them).

Technical Analysis

In contrast to the fundamental analysis, which shows the factors that dump the cryptocurrency market today, there is also an intriguing technical analysis pattern that promises a rapid growth of Bitcoin (as well as the entire crypto market in general).

A trader nicknamed Crypto Rover saw the so-called Golden Cross on the Bitcoin chart — a well-known pattern of technical analysis in which the slow-moving average crosses the fast one from the bottom up. According to many analysts, this pattern is a strong signal for market growth.

However, some of his colleagues do not agree with the Golden Cross approach. Also, his interpretation by Crypto Rover is disputed:

 

Historically the golden cross is a good buy signal, but only if it occurs at a low. When it occurs on a relief bounce high as with 2014, then it is a good sell signal.

— juan®.eth (@jpduprz) September 22, 2021