Crypto Weekly: Surging upon progress of the Ethereum merge Crypto Weekly: Surging upon progress of the Ethereum merge Crypto Weekly: Surging upon progress of the Ethereum merge

Crypto Weekly: Surging upon progress of the Ethereum merge

Mads Eberhardt

Cryptocurrency Analyst

Summary:  Along with the equity market, the crypto market surged in July. The positive sentiment in the equity market was likely a contributing factor to the surge in crypto, as well as the expectations to the forthcoming Ethereum merge. After a successful test in July, we currently assign a 75% chance of the merge occurring in September. And speaking of the equity market, Tesla liquidated the majority of its Bitcoins in the second quarter, putting Bitcoin’s “store-of-value” narrative under pressure.

The anticipation of the Ethereum merge prompts a surge

For the past couple of weeks, the crypto market has been on an upward trajectory. Since local lows of 17,600 (BTCUSD) and 887 (ETHUSD) in mid-June, Bitcoin and Ethereum have surged to 23,200 and 1,670, respectively, amounting to a surge of 31.60% and 91.25% while other minor cryptocurrencies have followed suit. The surge has surely been driven by an enhanced risk-on sentiment originating from particular equities over the past month. However, one might also look at the crypto market itself to find the source of the positive sentiment. In early July, the second existing Ethereum test network known as Sepolia underwent the merge, transitioning from proof-of-work to proof-of-stake without any major issues. Hereby, only one more existing test network called Görli needs to undergo the merge before it is the real deal. Görli is scheduled to be merged around Thursday, August 11. With the Görli test network being the last obstacle before the real merge, Ethereum’s developers say that September 19 has been chosen as a ‘soft’ date for the merge. However, Ethereum Foundation and its developers have categorically been too optimistic with respect to timelines, so this date should be taken with a pinch of salt.

Asking us, at the time of writing, we assign a 75% chance in favor of the Ethereum merge occurring in September. In case the Görli merge occurs flawlessly, this increases to 95%. In plain English, Ethereum is truly close to its transition to proof-of-stake, with the latter likely taking place within the next two months. It seems the market agrees with this view. Based on Ethereum’s price activity in July compared to the one of Bitcoin, traders undoubtedly favor holding Ethereum upon the merge. In our view, the positive sentiment in Ethereum has positively influenced the price actions of the rest of the space, including Bitcoin. For instance, open interest in Ethereum options hit an all-time high last week. The merge is set to reduce the yearly issuance of Ether from 5.5mn Ether to 0.6mn Ether, increasing staking rewards, and lowering the network’s energy consumption by over 99.95%.

Ethereum/USD and Bitcoin/USD the past 3 months - Source: TradingView

It is yet to be seen whether the market can keep this steam until the Ethereum merge. If the Görli merge occurs flawlessly, it might fuel the anticipation of the merge once again. The same can be said in a negative manner if the Görli merge results in severe issues, likely delaying the merge. As the market has extended a high correlation to the equity market in July, particularly to technology stocks, participants in the crypto market should closely watch the sentiment in technology stocks, since it might continue to greatly impact the prices of cryptocurrencies.

Tesla liquidates the majority of its Bitcoin holdings

What might also have contributed to the outperformance of Bitcoin by Ethereum in July was Tesla announcing it has sold the majority of its Bitcoin holdings in the second quarter. Following the company’s Q2 earnings on July 20, Tesla announced it has liquidated Bitcoins worth $936mn. Since the company has earlier liquidated Bitcoins worth around $272mn, it is estimated that Tesla still holds a small amount of around 9,700 Bitcoins from its original purchase worth $1.5bn in 2021. Many crypto advocates were fast to state the positive significance of this liquidation since it means that fewer Bitcoins are held by investors more likely to capitulate, but we disagree with this view. Although the market has already absorbed these Bitcoins short term, it greatly negatively impacts the “store-of-value” narrative of Bitcoin long term when one of the largest companies globally liquidates its Bitcoin holdings. Following the announcement, Tesla said that it might again acquire Bitcoins in the future, should its balance sheet once again enable such a purchase.

Bitcoin/USD - Source: Saxo Group
Ethereum/USD - Source: Saxo Group

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.