With Bitcoin and Ethereum so close to their pre-crash highs, general market sentiment appears to be mostly bullish. With that in mind, analyst CroissantEth has made it his business to summarize the factors that are causing such sentiment among traders and operators.
Related reading | As Bitcoin breaks through $ 57,000, Quant explains why there might be a pullback here
Via Twitter, the analyst claimed that Bitcoin had increased its awareness to the level last seen in May, just before the cryptocurrency lost over 50% of its value in the first of several surrender events.
In addition, BTC’s second-layer payment solution Lightning Network has seen a massive surge in adoption. The analyst attributed this growth to the introduction of the Bitcoin law in El Salvador.
As can be seen below, the Lightning Network has recently seen an explosion in the number of payment channels. This metric is currently at an all-time high with an increase of 226% over the past 12 months.
Source: Glassnode via CroissantEth
Bitcoin will soon implement its biggest upgrade since its inception, Taproot. The upgrade is scheduled to roll out in November 2021 and will improve data protection and network security, as well as smart contract functions. As the croissant noted, you “probably want to be careful” with BTC upgrades.
A third potential price catalyst for BTC is the approval of an exchange traded fund based on Bitcoin derivatives by the US Securities and Exchange Commission.
Related reading | Bitcoin Shocktober continues to outperform altcoins en masse
How Bitcoin could benefit from ETF approval
Some analysts believe the US BTC ETF approval could trigger a “buy the rumor, sell the news” event. Pantera Capital CEO Dan Morehead went so far as to claim that this event will mark the end of Bitcoin’s current upward cycle.
However, the croissant contradicts this view and has defended the importance of a BTC ETF as a way to attract fresh capital into the crypto market. As the analyst previously stated, investing in Bitcoin after China banned it from its territory could be considered ESG-friendly.
Thus, this could create a new level of incentive for institutions to allocate capital for the cryptocurrency, the croissant said:
Investing in Bitcoin is investing in ESG. The importance of this cannot be underestimated as it will be the argument needed for the institutional adoption of BTC and several key players in the financial industry know this …
Finally, the analyst pointed out that BTC was trending higher towards the end of the year. The macroeconomic landscape, with its “unrealistic monetary policy”, offers further incentives for investors to be attracted to Bitcoin.
BTC is trending down on the daily chart. Source: BTCUSD Tradingview
Ethereum on the way to a new era
The second cryptocurrency by market cap, Ethereum, continues to dominate most of the major trends in this space. From Non-Fungible Tokens (NFTs), Decentralized Finance (DeFi) to the play-to-earn model popularized by platforms like Axie Infinity.
Ethereum seems to have infinite use cases and uses. That is why many institutions and big players have turned to this network.
Ethereum, on the other hand, is picking up speed in a number of sectors
The explosion of NFTs has brought big players to the blockchain, and new things are being announced every day
This has drawn the attention of VISA, GameStop, Budweiser, TikTok and the NBA. https://t.co/bon2ql4j42
– Croissant (@CroissantEth) October 11, 2021
Of course, the recent implementation of EIP-1559, an upgrade to Ethereum’s fee model, has created a bullish catalyst for the price of ETH. The update burns a portion of every transaction fee on the network, effectively turning ETH into a deflationary asset.
Related reading | TA: Ethereum bears keep pushing why ETH could slide further
The effects of this change are still not being felt across the market, as the croissant claims:
EIP-1559 worked behind the scenes to burn $ 1.8 million worth of ETH in just 68 days. This is ETH being removed from the existing offering that would otherwise have passed into the hands of the miners (and likely would have been sold). This will have astronomical implications over time
The transition from Ethereum to Eth 2.0 in an event known as “The Merge” is also part of the bullish factors for the cryptocurrency. According to the analyst, the “supply shock” effect on the price of ETH and the improvements in the scalability of the network should not be underestimated.
ETH with slight losses in the daily chart. Source: ETHUSD Tradingview