Heading into today’s CME Bitcoin futures expiry, the market had yet another meltdown, with Bitcoin falling below $8k yet again before gradually recovering, while Ethereum fell into the low $150s and subsequently recovered to the mid-$160 area. As a reminder, just over 50% of CME Bitcoin futures open interest is set to expire. What is interesting to note about the recovery, following yet another rout, is that, yet again, Ethereum has outperformed Bitcoin and, in early European trade, Bitcoin is down just under 4%, while Ethereum is down 1.5%.
As pointed out in the past, the recent Ethereum performance has been attributed in large part to the increased number of Tether transactions on the Ethereum blockchain. But it is also worth highlighting Ethereum Classic’s market outperformance heading into its own network upgrade earlier this month, which paired with a later upgrade called Agharta, is intended to boost chain interoperability between the Ethereum Classic (ETC) and Ethereum (ETH) networks (note - the Agharta hard fork is scheduled for March 2020). This suggests that the market isn’t as bearish towards Ethereum as was previously viewed.
At the same time, the Ethereum network itself is set to undergo a raft of upgrades dubbed Istanbul. These will be rolled out over the coming months and will include a number of Ethereum Improvement Proposals (EIPs), which will need to be deployed on testnets before a smooth mainnet hard fork. Istanbul is the 8th Ethereum network upgrade which will hit the Ropsten and Goerli test networks next month. November and December will see rollouts on the Rinkeby and Kovan testnets before the mainnet launch in early 2020. The upgrade will include EIPs that address the following issues; aligning the costs of opcodes with their computational costs and improving denial-of-service attack resilience. Making layer 2 solutions based on SNARKs and STARKs more cost effective, enabling Ethereum and Zcash to interoperate (atomic swaps) and allowing contracts to introduce more creative functions.
In other news, Venezuela’s central bank is exploring the possibilities of holding Bitcoin (BTC) and Ether (ETH) in its coffers, according to anonymous sources who reportedly have direct insights into the matter. The state-run oil and gas company, Petroleos de Venezuela SA (PSDV), had requested the central bank look into the matter after the oil producer ran into difficulties receiving payments from international clients due to U.S. sanctions against Venezuelan President Nicolas Maduro’s current regime. The unnamed sources said that the PSDV is looking to transfer Bitcoin and Ether to the Venezuelan central bank and then have the central institution pay its suppliers in cryptocurrencies.
Thank you for reading,
The BeQuant’s Analytics team