For the first time since the 75% fall in Bitcoin prices, the crypto market appears to have regained stability. Bitcoin and Ethereum have increased in value since their lowest points in mid-June, and the total market value has returned back to 1 trillion USD, according to CoinMarketCap.
JPMorgan stated in its note earlier this week that there are two main reasons for the market’s recent strengthening in the crypto sector. They said, "what has helped, we think, has been more limited new contagion from the collapse of Terra/Luna," while referring to the downfall of the stablecoins which was followed by billions of losses and the shutdown of several crypto companies such as Voyager Digita or Three Arrows Capital. They also later shared:
"However, we think the real driver has been the Ethereum merge and positive data following the launch of the Sapolia testnet in early July and Ropsten testnet in June, indicating the merge is viable in 2022."
Further, the upcoming merge of Ethereum is supposed to transfer the Ethereum blockchain from Proof Of Work (POW) to faster, lower energy consumption for mining and a more efficient system of Poof Of Stake (POS). If the merge is successful, it could help boost the positive attitude towards the crypto market and help it recover faster. According to some, the merge is to take place later this September, depending on the outcome of Georli testnet performance, which is scheduled for tomorrow, 11th August, and represents one of the last steps before the merge.
Even though Ethereum is getting more stable and bullish, it will still take a long time before the entire market can follow its steps. While the trading volume was dropping continuously in July, including the NFT market collapse, the recovery of the crypto market could take months and that is why many investors find the Ethereum merge a much-needed short-term boost for the market on its recovery path.