Dear Teroxx Community,

This week we saw a digital asset market that declined in line with global financial markets.

Weekly overview

As usual, we are also providing detailed videos for those who want to delve deeper into the subject.

Digital Asset News

Investors look back on a bearish trading week. Contrary to expectations, the consumer price index (CPI) in the USA rose from 8.1 per cent to 8.3 per cent after a recent downward trend in prices in the previous months. Market participants interpreted this development as proof that inflation is not decreasing for the time being. As a result, investors divested their stock and crypto holdings en masse, which ended in a black Tuesday.

The US technology index Nasdaq100 lost nearly six percentage points, plunging the most since March 2020. Technology blue chips such as Apple and Amazon were not spared either, trending six to eight percentage points lighter. The prices of supposedly risk-averse asset classes such as US government bonds, gold and defensive stocks from the pharmaceutical sector were also punished. At the same time, the US dollar index DXY rose to a new high for the year.

The Ethereum Merge, and with it the full transition of the network to Proof-of-Stake (PoS), has officially taken place.
On 15 September at around 08:45, the highly anticipated merge took place, merging the execution layers of the Ethereum mainnet and the consensus layers of the beacon chain at the Terminal Total Difficulty of 5875000000000000000. With this, the network abolishes proof-of-work consensus.
The Ethereum Foundation says the merge will make the Ethereum network about 99.95 per cent more energy efficient and enable scaling solutions in the future, including sharding, for example.
Ben-Sasson said this is also “the first step in a process that will lead to very widespread adoption of Ethereum”. Furthermore, he went on to explain:
“This sets off a chain reaction of change. The end result will be a very broad use of Ethereum’s computing power and the general public will use blockchain-based applications in many different areas of life.”

An analysis by Santiment shows that 46.15 per cent of Ethereum’s PoS nodes are controlled by just two addresses.
Hours after the merge, the first address validated about 188 blocks, or 28.97 per cent of nodes, while the second address validated 16.18 per cent, or 105 blocks. In the run-up to the merge, blockchain analytics platform Nansen published a report stating that five entities held 64 per cent of all clocked Ether. Coinbase, Kraken and Binance accounted for almost 30 per cent of all the staked ETH in this regard. It was also reported that the majority of the 4,653 active Ethereum nodes are in the hands of centralised web service providers such as Amazon Web Services (AWS).
“Since the successful merge, the majority of blocks, about 40 per cent or more, have been created by two addresses belonging to Lido and Coinbase. It’s not ideal to have more than 40 per cent of blocks being processed by two providers, especially if it’s a centralised service provider (Coinbase).”
The future will show how decentralised and diverse the new PoS structure at Ethereum can become.

Technical term of the week

FED Meeting: Describes a (mostly) monthly meeting of the US central bankers. Short-term monetary policy is determined at this meeting. These decisions often have a major impact on the global financial markets. Especially in the current period, the markets react particularly sensitively to decisions, which is why these meetings are attributed great importance.

Digital Asset Markt

Last week saw market movements that were negative for most digital assets.

The signs were there for a positive market week. The long-awaited Ethereum Merge and with it the shift to greener, as well as more sustainable digital assets, and the inflation data interpreted as “falling” in the run-up to the data release caused slight optimism in the markets.
However, the inflation data turned out to be higher than expected and the Ethereum Merge also became a “non-event” in the market in terms of price. The impact of the inflation data was felt in almost every financial market as prices fell as central banks are now forced to raise interest rates further as it became clear that the current path/steps are not yet sufficient.

Bitcoin held around the support zone at ~$20,000 for a long time despite the bad news, but could not hold this support level and thus followed the trend of the global financial markets.

Bullish outlook: If the FED decision is in line with analysts’ views, the markets could experience a slight upswing towards midweek.

Bearish outlook: If the Fed forces a more drastic interest rate decision, the negative trend in the global financial markets could extend.