Ethereum Leads Crypto Rally On Energy-Efficiency Optimism
Cryptocurrencies rallied for a second day, with Ether-related tokens leading gains.
(Bloomberg) -- Cryptocurrencies rallied for a second day, with Ether-related tokens leading gains, as risk aversion eases and optimism grows about the long-anticipated software upgrade of the blockchain network.
Ether, the native token of Ethereum, jumped as much as 9.5%, and has surged as much as 27% on an intraday basis since Tuesday, the biggest two-day gain since January 2021. The digital token is still down more than 50% this year.
Bitcoin rallied as much as 5.2% to $23,971. Its two-day gain of 14% is the largest on an intraday basis since June 20. The largest digital token by market value is down 48% since December.
The rally signals growing confidence that Ethereum’s move from the current system of using miners to a more energy-efficient system using staked coins is nearing. The switch to this so-called proof-of-stake system is expected to take place in September. This week, Ethereum developers have signaled continued progress in testing the new system, and they are holding a series of events for prospective stakers and other community members in the coming weeks.
“The Ethereum merge will turn the protocol into a proof-of-stake chain and provide more utility for the token, changing the tokenomics, and providing excitement for further decentralization for Ethereum going forward,” said Paul Veradittakit, a partner at Pantera Capital.
More Ethereum-related assets extended gains Thursday. Uniswap, a decentralized crypto exchange that’s most popular on Ethereum, saw its token jump nearly 36%. Ethereum Classic -- which branched out from Ethereum several years ago -- rallied nearly 38%, and Lido DAO’s LDO token rose about 53%, according to CoinMarketCap. Lido issues a derivative of Ether.
Work on the Merge has been going on for years, and it’s been delayed many times. It was most recently expected to take place in June, but was delayed once again.
Meanwhile the broader crypto market continued to benefit from traders dialing back wagers on Federal Reserve hikes after an ugly economic reading fueled concern about a US recession.
“Market is outperforming right now on macro outlook,” said Katie Talati, director of research at Arca. “Many are now speculating that the Fed will take a more dovish stance and will slow any further rate hikes for this year.”
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