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Bitcoin

Ethereum Soars Ahead Of Major Upgrade, Boosting Bitcoin And The Price Of BNB, Cardano, Polkadot And Solana

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Ethereum, the second-largest cryptocurrency after bitcoin, is soaring as traders pile into the cryptocurrency ahead of a closely-watched upgrade code-named London.

The ethereum price is up 8% on the last 24 hours, with its rally helping the bitcoin price to tick slightly higher and sending ethereum’s biggest rivals—Binance’s BNB, cardano, polkadot and solana—up between 3% and 10%.

The combined cryptocurrency market, currently dominated by bitcoin and ethereum, has added almost $500 billion since its July lows.

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Ethereum’s London upgrade, designed to improve network efficiency and fee predictability, is scheduled to go live around 8am EDT and is part of ethereum’s long-awaited move away from the energy-intensive proof-of-work model used by bitcoin to proof-of-stake—allowing users to generate new ether tokens via their exising holdings.

The London upgrade will also see some of ethereum’s ether tokens destroyed, or “burned”—a change that some think will mean ethereum is able to further close the gap on bitcoin’s $700 billion market capitalization as its tokens become more scarce. Ethereum currently boasts a market capitalization of around $300 billion. Earlier this year, ethereum cofounder Vitalik Buterin said the upgrade could mean ethereum becomes more “sound” than bitcoin.

Ethereum’s price, up a massive 500% on this time last year, has outpaced bitcoin and most other major cryptocurrencies in recent months as the market for decentralized finance (DeFi) and non-fungible tokens (NFTs) explodes.

DeFi, the idea that the likes of lending and insurance can be replicated by software protocols cutting out banks, and NFTs, unique digital crypto tokens tied to media, have both become multi-billion dollar markets over the last couple of years. Almost all DeFi funds and NFTs are currently based and traded on ethereum’s blockchain.

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However, some of ethereum’s rivals, including Binance’s BNB, cardano, polkadot and solana which proponents claim are already more technologically advanced than ethereum, are hoping to win DeFi and NFT market share.

“Just like in 2017, ethereum has proven itself to once again be at the epicenter of crypto market activity,” Pete Humiston, manager at U.S. bitcoin and crypto exchange Kraken’s Intelligence division, said in a report out this week.

“Both DeFi and the NFT space, two robust industry subsectors worth tens of billions of dollars in their own right, take place almost exclusively in ethereum’s ecosystem today. This may explain why demand has been so resilient. Ether has been an outperformer all this year, and we see no reason why that will change in the near-term.”

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Litecoin

Cardano Primed To Follow Litecoin’s 2018 Price Trajectory, According to Veteran Trader Peter Brandt

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Veteran analyst and trader Peter Brandt is issuing a warning to Cardano holders, saying that the fifth-largest cryptocurrency could be on the brink of following Litecoin’s 2018 price trajectory.

The popular crypto strategist tells his 549,300 Twitter followers that Cardano could be at the top of the price range and facing a potential downtrend, similar to what Litecoin (LTC) flashed during the height of the 2018 bear market.

 

According to Brandt’s chart, Cardano could be printing a large technical reversal figure in the form of a head and shoulders pattern with a neckline or key support area at around $1.00. A head and shoulders pattern is often seen by traders as a sign of a looming bear market. A move below the pattern’s neckline at $1.05, similar to Litecoin’s 2018 path when it breached support at $105, could confirm Brandt’s bearish prediction.

Fellow crypto analyst Capo agrees with Brandt’s evaluation but says that Cardano must first take out the support before a reversal can take place.

“That support has to hold, I agree. And it’s likely to hold.”

Taking an opposing stance to Brandt’s bearish outlook on Cardano, crypto strategist and trader Michaël van de Poppe says the smart contract platform could surge 800% if it reclaims key levels against Bitcoin.

“If we’re going to make a bottom around 2,800 satoshis [about $1.16], we can see a 170% and usually overshoot 190% trade on the Bitcoin pair.

I’m also expecting the value of Bitcoin against the US dollar to do well. So if we get into this region (0.00008 for ADA/BTC or $3.17), it’s probably going to result in a 400% to 800% move on the [ADA] US dollar value, especially given that the market is going to heat up once again.”

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Market & Analysis

Cardano smart contracts creep toward full launch

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The Cardano network is in the watershed phase of its network development and upgrades. The ongoing phase of the protocol’s roadmap is the Goguen phase, bringing smart contracts to the network. This is the third phase of the roadmap after Byron and Shelley. The Goguen phase was split into three stages, Allegra, Mary and Alonzo.

The Allegra update went live on December 16 last year, and the Mary update was deployed on the mainnet on March 1 earlier this year. This leaves the Alonzo upgrade, which was further split into three different phases, named Blue, White and Purple. While the final deployment of the Alonzo upgrade on the mainnet was planned to be in August 2021, there seems to be a delay in the phase’s release, as Alonzo is still in the testnet part of its progress.

Since Alonzo brings the much-awaited smart contract functionality to the network, the community has been eager to see them in action, as it entails the enabling of decentralized applications (DApps) on the blockchain.

On July 15, Input Output HK (IOHK) announced on Twitter that their Alonzo testnet has hard forked from the Alonzo Blue to the Alonzo White node, allowing for the expansion of their smart contract functionality on the platform. Although Alonzo Blue offered smart contracts, its availability was only limited to a set of insiders. Alonzo White now allows operators of stake pools, and network developers and 500 validators will be able to test this functionality going forward. The Alonzo White testnet is scheduled to run for a period of two to four weeks before transitioning to the final stage of the Alonzo update, Alonzo Purple.

Cardano’s network is in the third phase of its development, known as the Goguen Update, named after American scientist Joseph Amadee Goguen. This update integrates smart contracts into the network, allowing for the creation of DApps. In phases one and two, the network has gone through the Byron and Shelley upgrades which focused on the establishment of the network and its decentralization, respectively.

After completing the Goguen phase, which was initially supposed to be finalized in August 2021, the blockchain will go through phases four and five of the project’s roadmap, named Basho and Voltaire. Basho will improve the scalability and interoperability of the network, while Voltaire promises to make the network “truly decentralized” with the transfer of the entire governance mechanism to network participants, and will no longer be under IOHK’s management.

Optimistic prediction fails

Despite a well-structured roadmap and phase updates that the network promised, some questions are being raised on its current utility. Cardano founder, Charles Hoskinson, had predicted on July 27, 2020, that in a year’s time there would be hundreds of assets running on Cardano, along with thousands of DApps and “tons of interesting projects.”

In the following year, the crowd has called out this optimistic prediction, pointing out the network is nowhere close to the levels of utility that Hoskinson predicted a year ago. Meanwhile, many members of the Cardano community defended the network, saying that the statement made by Hoskinson was just a prediction and not a promise. Hoskinson himself responded to the critics, saying that “There are thousands of assets on Cardano.”

He also released a YouTube video on July 8, claiming that the project is progressing in line with the framework of the defined roadmap and that more than $10 million of nonfungible tokens (NFTs) have been sold throughout the network. He added that once Alonzo White is deployed on the mainnet, developers will have the ability to launch DApps and NFTs on the network. Ben Armstrong, youtuber and creator of BitBoyCrypto.com, told Cointelegraph:

“The Cardano team hasn’t backed away from their smart contract launch period starting in September. Considering how well the Alonzo White hard fork has gone, I don’t expect any further delays. That said, Cardano’s methodical approach means they’ll push a deadline before the possibility of taking a step back on a bad launch.”

Marie Tatibouet, chief marketing officer of Gate.io, a cryptocurrency exchange, told Cointelegraph that the roadmap is still intact. About the questions raised on the utility aspect of the Cardano network, Tatibouet opined that since the Alonzo upgrades’ main proposition in the Goguen phase consists of the implementation of smart contracts on the network, it can’t be judged on its lack of utility until smart contracts have been completely integrated.

Armstrong spoke further on the dilemma of smart contracts holding up the network’s growth, saying, “It’s a chicken and egg situation. You need smart contracts to really get DApp development going, but you also need killer DApps to draw more development to the space. There are a lot of DApps that are on Ethereum and waiting in the wings for Cardano.”

He even mentioned that since blockchain developers are in very high demand at the moment, poaching has become a huge problem. “When ICP hit Coinbase this year, Charles was open about how DFinity poached several of his top engineers. I imagine that has caused some delays in Cardano-specific development across the industry.”

Nearly 72% of all ADA is staked

At its current state, the low utility of the Cardano network might be impacting one important aspect: The staking of its native token, ADA. According to data, nearly 72% of all ADA tokens are staked on the network, amounting to around $30 billion out of a roughly $42 billion market capitalization. This includes 2,745 active pools and a total of nearly 716,000 staked addresses.

Tatibouet spoke about the current utility of ADA tokens themselves, saying: “As of now, the two main functions of the ADA tokens are staking and governance. In that regard, it is a very good sign that so many holders have faith in the network and have staked their tokens in the ecosystem.”

She also added that it’s important to remember that staking ADA is way more flexible than the usual staking mechanisms of other protocols. It allows stakers to access their tokens at any time that they choose since the tokens aren’t completely locked away from the staker, thus adding to the convenience of staking on the network. Armstrong opined further on the integration of smart contracts that will impact the high proportion of staking in the network, explaining why the tokens are being staked:

“They are hodling onto their stack of ADA, not just to use it for gains down the road but also to have a say in the eventual governance coming in Voltaire. Even with the current state of smart contracts, there are already NFTs you can buy and games to play. But once ADA asserts itself in smart contracts, you’re going to see that staking figure drop significantly.”

Regarding the potential launch of DApps on Cardano after the implementation of smart contracts, Cardano also attempts to propose real-life utility through its network. Earlier in April, IOHK partnered with the Ethiopian government in a bid to revamp the country’s education system by leveraging Cardano’s blockchain technology.

Related: If the peer review system is broken, what the hell is the point of Cardano’s reliance on it?

In July, Grayscale added ADA to its Digital Large Cap (GDLC), making it the third-largest component of the fund’s basket after Bitcoin (BTC) and Ethereum (ETH). Grayscale is seen as a benchmark of institutional interest in the cryptocurrency markets. Duc Luu, executive chairman at Spores Network, an NFT and decentralized finance marketplace based on Cardano, told Cointelegraph:

“Cardano promises the possibility of greener blockchain footprint, lower gas fees and higher throughput which we believe makes it a prominent venue for NFTs, as well as DeFi mainstream adoption, which are the two areas that institutional investors are very much interested in.”

While discussing the timing of real-time utility coming into the network, Luu further mentioned that he believes it will happen soon, adding: “Cool functions like ERC-20 converter would allow projects to deploy quickly from ETH to ADA. There are many projects like us eagerly waiting in the background for the Cardano smart contract launch.” He also anticipates that in six months from the launch of smart contracts on the network, the Cardano ecosystem will see a drastic change.

However, it is important for the Alonzo network upgrade to be on schedule on the mainnet, as it’s highly anticipated in the community. Other upcoming blockchains like Binance Smart Chain (BSC) are growing at a rapid pace, which could lead to some of the protocols to build on it instead.