Crypto Weekly Update 20th October 2021

Last week Bitcoin become a $1T asset class and the price of the leading cryptocurrency is still growing aiming to break its record of $64 400. But what about the other digital assets? Let's dive in and take a look.

Ether aims to hit the $4000 barrier

Three months ago the second largest cryptocurrency by market cap was selling for $2000 after reaching its record high of $4350 in May. 5 months later Ether is back as the price of the token jumped 4.19% last week and is currently sitting at $3785, closing in on the $4000 barrier.

There is not an exact reason for the surge but when we zoom out we can find a long upward trend. There are a number of factors contributing to the price movement such as the network's progress towards Ethereum 2.0 which will move the blockchain from proof-of-work to proof-of-stake, where the miners will become validators and will have to "stake" Ether to verify transactions and maintain the network.

DeFi (decentralized finance) and NFTs (non-fungible tokens) are alos a contributing factor. Last summer the DeFi projects gained popularity by solving many financial problems such as lending and borrowing without a third party. Despite increases in use of Solana, Cardano and other blockchains, Ether is still by far the most important chain with over two-thirds of the total value floating around in DeFi and along with NFTs too, are dependent on the Ethereum system.

Additionally, we have to mention EIP-1559, which changed the structure of the fees. Fees used to go to the miners for the verification of the transactions but currently the fees are destroyed. The update made Ether a deflationary asset and increased the price.

The USA is the largest Bitcoin mining market

According to the latest report by Cambridge University, the US has become the world's largest market for Bitcoin mining. Currently, it holds 35.4% of the global market after the Chinese government recently totally banned the industry. In April 2021 the US was responsible for only 16.8% of the global hash rate, meaning the American share has increased by 105%.

Kazakhstan and Russia are also among the top three countries with a market share of 18.1% and 11% and increased their share by 120% and 61% respectively.

According to the report the global hash rate dropped by 38% in May but soon after the metrics started to recover and bounced back by 20% in July and August. Michel Rauchs, digital assets lead at the Cambridge Centre for Alternative Finance, said that most of the miners have moved their equipment and started operating again and it appears that the USA is one of the top destinations.

Celsius raises $400M funding round

Celsius Network, a crypto lending platform, raised $400M, evaluating the company at $3B according to the Financial Times.
Despite the lofty figures, Celsius' chief executive, Alex Mashinsky, said "It's not the $400 million,"… "It's the credibility that comes with the people who wrote those cheques."

The funding round has come at a time of regulatory attention for the company. In September the New Jersey Bureau of Securities filed a cease-and-desist order against Celsius and ordered the company to stop offering its high-interest savings accounts to customers from New Jersey by the end of October.

In the same month, the Texas State Securities Board ordered Celsius to appear for a hearing on February 14, 2022. The regulator threatened to issue its own cease-and-desist order as well.

Despite the regulatory controversy, the investors seem to have no concerns. "It's quite typical for [regulators] to begin examining some of the market leaders in order to clarify their own rules. This is part of the process of regulating a new market," said Laurence Tosi, executive of WestCap, who led the funding round for Celsius.