Mooners and Shakers: It’s a crypto ‘Monday, Bloody Monday’ as Ethereum Merge faces potential delay

ETH may not be the worst-hit crypto today (scroll down further for those fun facts), but it’s up there. It’s taken a pretty severe beating over the past 24 hours partly due to a development delay which has the potential to hold up “the Merge”, and partly due to wider factors, including Celsius-related drama.

Considering it’s regarded (within crypto circles at least) as one of the two safest assets in this risky investment class, much of the market might well be in some state of shock at just how far and fast things have tanked over the past 24 hours.

Well, maybe not trader “Roman”, who’s been pretty accurately predicting the crypto-market descent in stages for months now…

What’s causing this bloodbath?

It’s a sum of all fears kinda deal — a casserole of crypto consternation. Point being, it’s more than one thing…

• Concerns that prominent crypto-lending firm Celsius might be facing a solvency-threatening crisis, making it the next domino in line to fall after Terra/LUNA, is certainly the fear du jour.

You can read more about that here. But epiloguing the story — one of Celsius’ rival lending services, Nexo, has offered to buy the former’s collateralised loan portfolio in order to make sure affected users can keep their funds intact.• Of course, there’s also the global economic turmoil that has potential to spark a major recession — not necessarily a great environment for risk-on asset classes such as crypto. That’s definitely in the backs, sides and fronts of many investors’ minds right now, too.

How will the US Federal Reserve respond to the worst CPI inflation data (8.6%) handed to the US in 40 years? It holds its FOMC (Federal Open Market Committee) meeting later this week, so we’ll soon find out. Staying on course with another 50bp interest-rate hike is expected. If the Fed lifts that to 75bp, though, sheesh… time to duck for cover. Again.

• Tied to the above point is the ongoing bed-crapping performance of tech-focused US stocks (S&P 500 -3.88%; Nasdaq 100 -4.60%) and the crypto market’s deep correlation to them. Not forgetting, of course, the inverse correlation of stonks and crypto to the currently robust US Dollar Index (+1.01%).

• As for Ethereum more specifically, it’s hardly helped matters much that the blockchain’s core developers have just announced a delay to a key part of its protocol upgrade, known as the “Difficulty Bomb“. (We’ll let Investopedia handle the explanation on that one… and Decrypt, below).

The upshot there, though, is it could mean a delay to the protocol’s much-anticipated Merge upgrade — the transition from proof-of-work consensus mechanism to proof of stake. Although one of the chain’s core developers, Ben Edgington, tweeted the following:

“So, we will push back the Ethereum difficulty bomb… We say it won’t delay the Merge. I sincerely hope not.”

Mooners and Shakers is sponsored by Dacxi, the world’s first purpose-built Crypto Wealth platform.

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