On Monday, the total crypto market capitalization climbed above $1 trillion for the first time in five weeks. The milestone comes amid three key crypto bankruptcy proceedings getting underway and investor expectations for Ethereum’s long-awaited The Merge upgrade.
Crypto’s move to regain the $1 trillion dollar market cap follows a catastrophic Q2 2022 for the asset class.
Bitcoin (BTC) changed hands above $22,000 for most of Monday morning, with its move over the last week nearing 10%.
The Bitcoin Fear and Greed Index, an indicator crypto traders use to judge market sentiment around crypto’s largest coin, has improved three-fold since June 18, when it registered the lowest level seen in the past four years. However, the mood gauge still hovers at “extreme fear” levels.
Meanwhile, crypto’s best story for the second half of 2022 might hinge on Ethereum’s successful transition to proof-of-stake, according to Matthew Hougan, a chief investment officer of crypto-asset manager BitWise.
Ether (ETH) is trading at about $1,480 per coin and has seen a 30% rise over the last week, thanks mostly to growing optimism for its long-awaited software upgrade.
“Ethereum will be the institutional asset of choice in the second half of the year, and it’s on sale,” Hougan said.
Although the so-called Merge still doesn’t have a hard timeline, Ethereum Core developer Tim Beiko suggested that if the final “dress-rehearsal” test slated for the first half of August proves successful, the official merge could occur the week of September 19.
After hitting a year-to-date low on June 18, Ether has regained roughly 4% in market share, rising from below 14% to 17.7% as of Monday.
Noting the Ether’s sizable rise relative to bitcoin’s decline in market share over the last four days, Noelle Acheson, head of insights with a prime broker, Genesis Trading, said the shift suggests “a recovery in risk sentiment.”
Meanwhile, investors will be closely watching developments around three major crypto bankruptcies: Three Arrows Capital, Voyager Digital, and Celsius Network.
While the whereabouts of Three Arrows co-founders Kyle Davies and Su Zhu remain unknown, and Three Arrows owes both firms sizable amounts of money – $650 million to Voyager and $40 million to Celsius according to court documents – that could be used to repay the customers of both lending platforms.
Each lender’s ability to pay back customers will have a significant impact on shaping the near-term prospects of whether American investors will be able to trust crypto firms with their funds.