🧘♂️What Just Happened to ETH?
Market Meditations | August 30, 2021
54% of nodes impacted.
A warm welcome to the 423 meditators who joined us last week.
The crypto markets are booming at an unprecedented and global scale; there are numerous opportunities but the markets can be as unforgiving as they can be profitable and rewarding.
Fortunately, you are not navigating the markets alone. Today’s meditations include:
? Everything you need to know about the Ethereum Bug
? Technical Analysis on: BTC, ETH and FTT
?? The latest on El Salvador’s Bitcoin Law
? This week’s Crypto Calendar
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⚠️ Split the Difference
Ethereum’s blockchain experienced a split late last week as a result of a bug. Geth, the client exposed to the security threat, is the most widely used by nodes on the blockchain. A fix for the vulnerability was published August 24th on GitHub. As a result, only Geth clients running older versions were affected.
The bug caused nodes running unpatched versions of the Geth client to split from the main network. Around 54% of all nodes were affected by this bug. This split, if left unaddressed, could lead to valid transactions being overwritten which would effectively trigger double-spending attacks.
The Ethereum community maintains several options for open-source clients in order to ensure network strength and diversity. Geth is the most used client to choose from when running a node contributing to the Ethereum Virtual Machine (EVM).
Geth v1.10.8 was released on August 24th and featured a patch to address a discovered security threat in the EVM. All Geth versions supporting the London hard fork (EIP-1559) are vulnerable to the bug unless their client version has been updated.
It seems as if most of the big exchanges did not experiencea negative impact, as they were either already updated, or did so before being targeted by a malicious attack. The current hash rate still supports the longest chain, so no critical consequences have materialized.
Bugs and exploits are never good news. However, they are part of the technology industry. Forward progress into uncharted waters is rarely met with smooth sailing. The most important thing to remember is that this threat was identified before it was exploited. The solution was released days before the attack occurred and only affected clients who had neglected to update their client versions.
Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool.
We’ve been playing close attention to the 0.618 level. As expected, we’ve been facing resistance at this level. If you’re a regular reader of the Market Meditations, this should come as no surprise.
We may come back down as low as the 0.382 level and still be relatively bullish. Lots of data points support this level. It would not be too surprising to see us come down to the 0.382 level then bounce to break $50k.
This is still not where we would enter. We would potentially consider a long position at the 0.382 level. There is also an option to trade a breakout play at the 0.618 level.
That being said, if we did break $50k, it’s likely other areas of the market would outperform BTC. As such, we would probably look to enter long positions in other assets.
Very similar chart. Also facing resistance at the 0.618 level.
This is the kind of asset that is likely to perform better than BTC in a breakout scenario. Why? Compare and contrast the number of resistance levels BTC and ETH face above the 0.618 level. ETH faces far less resistance (it’s spent a lot less time in this area).
In the first half of this year, ETH hasn’t exploded as far as BTC. $10k ETH is still on the table and possible. We expect surprise upside in a BTC breakout.
All this being said and as we have mentioned in previous letters, we still wouldn’t be surprised to see both BTC and ETH trend downward. A 0.618 retracement and resumed downtrend would be nothing out of the ordinary. This echoes the sentiment: not the best entry. Stay alert and see how the assets respond to the 0.618 resistance.
Remains one of our favourite plays at the moment. Coming into a buy zone around 0.382. Invalidation just below $40. Strong narrative and an asset we think will perform well. Main resistance around $60.
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?? El Salvador Protests Bitcoin Law
The legislative assembly of El Salvador passed a law on June 8 to make Bitcoin legal tender in El Salvador. This was huge news and further proof that Bitcoin adoption was coming not only to major companies but also beginning to be adopted by countries! It seemed to be all good news – until now. This weekend, there were protests regarding the Bitcoin law.
El Salvadorian’s Against Bitcoin Because:
Bitcoin adoption could damage Salvadorian finances since they are not stable prices. “We know this coin fluctuates drastically. Its value changes from one second to another and we will have no control over it” said Stanley Quinteros – a member of the Supreme Court of Justice’s workers union.
Concerns over cryptocurrency being used to pay for pensions and welfare instead of the U.S. dollar in the future.
Positives From Bitcoin Adoption
Cutting the cost of remittances (i.e., a sum of money sent by mail). Bitcoin will help facilitate payments to and from families living abroad and those living in El Salvador.
Give those without access to bank accounts and credit cards a more even playing field.
The Bitcoin law is set to take effect on September 7. While there are concerns from the El Salvadorian people, the benefits regarding access to a bank account and remittance costs are things that are undoubtedly good. Their concerns on the U.S dollar vs. Bitcoin payments stem from instability in price. Some experts say that as Bitcoin matures, these “instabilities” in price will become smaller and smaller.
On Mondays, our ‘Scan The Week’ section is designed to show our community what events and headlines we will be keeping an eye on.
Monday, 30th August
⚽️ Win a Lega Serie A VIP experience and memorabilia
Crypto.com is giving away 10 Lega Serie A VIP tickets and 10 Official Lega Serie A Club Jerseys to new and existing Crypto.com App users, where the winners can attend the game and receive the jersey of their choice. Campaign Period: 09:30 26 August – 00:00 10 September 2021 UTC. You can use our link to download the Crypto.com app and have a chance of winning!
? Matrix Token Airdrop
The Matrix Token Airdrop Campaign is now live and running until 9th September. There is expected to be 200,000 MDF (MatrixETF Governance Tokens) in rewards and 1,000 winners. More information here.
Tuesday, 31st August
? Jury Selection for the Theranos founder’s fraud trial begins Tuesday
A lot of people who are interested in startups and entrepreneurship will have come across or heard of the book Bad Blood: Secrets and Lies in a Silicon Valley Startup. If you haven’t read the book, it tells a true story of Theranos: a company that told investors it developed revolutionary blood test technology capable of amazing results on just a few small drops. Theranos had been valued at $9 billion before reports exposed its inaccurate results and federal prosecutors charged founder Elizabeth Holmes for fraud. Jury selection is set to begin tomorrow, more information here.
Wednesday, 1st September
? Raydium Star Atlas Launch
Star Atlas is a grand strategy game that combines space exploration, territorial conquest, and political domination. In the distant future, players can join one of three galactic factions to directly influence the course of the metaverse and earn real-world income for their contributions. The Star Atlas offers a unique gaming experience by combining block chain mechanics with traditional game mechanics. All assets in the metaverse are directly owned by players, and can be traded on the marketplace or exchanged on other cryptocurrency networks.
Thursday, 2nd September
⚙️ Hedera Mainnet Upgrade
Hedera will be upgrading Mainnet to v0.17.3 on Thursday 2 September at 16:00 UTC. If you’d like to review the release notes, you may do so here.
Friday, 3rd September
?? U.S. Jobs Day
As always, the first Friday of the month marks U.S. jobs data day. Employment data is closely watched. As an indicator of the strength of the recovery of the economy, it provides clues as to when the Federal Reserve will stop providing as much monetary support. Less monetary support tends to generate a more ‘risk-off’ approach, which generally correlates with less activity in the stock markets.
??♂️✍️ Stories in this newsletter were written by Kyle F., Misael Calleja, Nick T., Max P., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Gerasimos P.
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