The week in crypto
A tale of two cryptocurrencies
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Two weeks ago, a top Ethereum developer announced publicly that the Merge, aka Ethereum’s move to Proof-of-Stake (the eco-friendly alternative to energy intensive Proof-of-Work), could be happening in September.
The event, which has been in preparation for at least 5 years, would be a systemic improvement for Ethereum, if successful. And investors seem to finally have taken note.
After ranging between $1,000 and $1,200 from mid-June to mid-July, ETH has gained almost 50% since and is now sitting between $1,500 and $1,600.
Bitcoin initially followed the move: after ranging between $19,000 and $22,000 from mid-June to mid-July, BTC rose to $24,000 (July 20) but since then fell back to $22,000.
While Bitcoin and Ethereum have been (very) different for years, in particular thanks to Ethereum’s smart contracts and fast block times, it looks like the move away from Proof-of-Work, Bitcoin’s flagship technology defended by many despite its carbon footprint, could finally be what motivates investors to differentiate the two major cryptos.
The “Merge rally” is probably going to gain more traction as Ethereum’s final testnet Goerli moves to Proof-of-Stake (estimated August 11th). That’s a major story to follow in the next weeks and something that will most probably catch the eye of even the most mainstream media.
Risk management
This ETH rally brings me to a more personal topic: risk management.
If you’re invested in crypto, it can be easy to forget that a 50% move is a major event and that 10x or 100x returns are NOT the norm anywhere outside of the crypto markets.
I bought some ETH between $1,000 and $1,100, which I’m very happy about, and, while I don’t think $1,500 is the top in any way, I took a bit of profit in the last days.
It’s fine to expect ETH to go back to $5k, or even to go to $10k, but that will take time and there may be many ups and downs between now and then (if it goes there at all).
