Accointing Weekly | May 27

Our weekly crypto newsletter is here! Read more about crypto at Davos and the upcoming Ethereum merge! We also have a crypto 101 tip for you!

Crypto at Davos

After a two-and-a-half-year pause, the World Economic Forum at Davos started on Bitcoin Pizza Day (May 22). Crypto-related topics were more popular than ever before – even amidst a market crash, the war in Ukraine, inflation, climate change, and food and energy insecurity. A whole panel section was dedicated to the Metaverse alone, and crypto companies had their booths all over the tiny city.

A lot of panels on the future of money, web3, CBDCs, and stablecoins attracted the attention of political and financial leaders, and even panels that were not supposed to be crypto-related, like the one on the future of the US economy, steered away very quickly from their “traditional” pitch. Crypto regulations were among the most common topics, with leaders grasping the vast differences in their crypto laws.

ETH merge might come as soon as August

Ethereum Co-founder Vitalik Buterin confirmed last Friday at the Ethereum Developer Summit in Shanghai that there is a big chance that “The Merge” will take place in August. The merge will turn the Ethereum chain into a solely Proof-of-Stake blockchain. Currently, it runs a hybrid PoS and PoW model where only the Proof-of-Work mechanism processes transactions.

The Merge itself is only one event in a series of updates that transitions the network to what is referred to as ETH 2.0. These updates all bring different improvements to the network and are poetically called: The Merge, the Verge, the Purge, and the Splurge. The upcoming merge combined with last year’s London fork, which implemented a burning mechanism, is speculated to make ETH deflationary. On top of that, the merge should create more opportunities for investors to stake their ETH. Analysts are already estimating that staking rewards could double, offering better yields for investors.

Crypto 101: Market Capitalization

One of the most important factors when researching a crypto project is market capitalization. It’s a good indicator of the total value that’s already in the project. But beware, there’s a difference between the current market cap and the fully diluted one. The market cap is the number of circulating tokens multiplied by the price whereas the fully diluted version is the total amount of tokens (including locked ones that will eventually get unlocked) times the market price. This might seem like a small difference but it’s something you should always check.

Let’s look at a quick example with BTC, which at the time of writing has a market cap of around 550 billion. The fully diluted MC of BTC is about 600 billion and that’s an excellent ratio. The higher the ratio, the more dangerous it is to invest, so always keep an eye out. For more crypto investing tips, check our Crypto 101 Guide.

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