July Market Recap: Rebound or Dead Cat Bounce?
A look back into the jam-packed month of July & more on "the merge" for Ethereum next month
Dear Sunday Investors:
Welcome back to the July recap edition of the Sunday Investor! To all members, this will be our second iteration of the monthly recap this week so let me know you all like it. This Sunday, we will be going into a recap for the markets in July starting the top 5-10 news articles of the month, TLDR of the markets in July, the top Twitter threads & educational videos of the month, and then more details on what happened in the last month and more on Ethereum’s merge while ending with our memes of the month and the conclusion!
As always, read, enjoy and share The Sunday Investor with any friends
Best News Articles Of The Month
July was the best month for the S&P 500 index since November 2020
GDP fell 0.9% in the second quarter, the second straight decline and a strong recession signal - CNBC.
Fed boost rates by another 75 basis points (bps) at their July meeting. Last month, policymakers increased the federal funds rate by 75 bps, the biggest increase since 1994. - US News.
Dollar is worth more than the Euro for the first time in over 20 years- CBS News.
Bitcoin was up 21% in July, its best performing month since October when BTC was up almost 40%. BTC hit its all-time high in November 2021 at just above $69,000. - Decrypt.
Ethereum’s merge date is announced to be September 19th after the final test date to be sometime in mid-August - Coin Telegraph.
Tesla sold 75% of its bitcoin holdings in Q2 2022, resulting in a $936 million impairment charge and a gain on sale of $64 million. CoinDesk.
Bankrupt Three Arrows Capital Founders Break Their Silence: The beleaguered duo discussed how one of the most successful crypto funds went from being a prominent trading desk to owing creditors $2.8 billion. - CoinDesk.
July Market TLDR
July was the best month for stocks in over 2 years
The annual inflation rate in the US accelerated to 9.1% in June of 2022, the highest since November of 1981
Fed raises rates again to try to combat inflation
GDP falls for the second quarter in a row which = recession
$1 Dollar is now > $1 Euro
Bitcoin is up 20% and Ethereum up over 50% in a big rebound month for crypto
Ethereum merge announced for September causes FOMO for investors
Legal proceedings begin for crypto CeFi exchanges in bankruptcy
Top Twitter Threads Of The Month
Top Videos Of The Month
ETHEREUM MERGE - The Most Anticipated Event In Crypto Explained by Finematics (Best Crypto Youtuber for Explaining DeFi)
Bankless Crypto: Guide For How to Not Get Hacked
Alpha of the Month: Preparing for the Ethereum Merge
What is the Ethereum Merge and why should crypto investors and enthusiasts care? Let’s find out below. Summarized the big sections below, but read more about all of the info here in the full Bankless article link here!
What Is The Merge?
‘The Merge’ is the name of the event when the Ethereum blockchain changes from using Proof-of-Work (PoW) to Proof-of-Stake (PoS).
The Merge is basically the merging of two independent blockchains that are currently running in parallel. The main Ethereum blockchain will be ‘merged’ with a experimental blockchain called ‘the Beacon Chain’.
This is set to happen next month…. mid September 2022!
What Is The Beacon Chain?
The Beacon Chain launched on December 1st, 2020. The purpose of the Beacon chain is to do one thing and one thing only: be a Proof-of-Stake blockchain.
There are no transactions on the beacon chain. There are no tokens or DeFi apps. It is an empty blockchain that is solely meant to be a blockchain that runs a Proof of Stake consensus mechanism.
Once these two chains are merged, Ethereum’s PoW validation will be replaced by a brand new PoS consensus mechanism.
Why Is The Merge So huge?
The Merge is considered one of the biggest events in crypto history since beginning of Bitcoin!
As Bankless puts it, no blockchain has undergone such a significant change in crypto’s history. Blockchains do not change such a critical part of its operation very often, and none have made changes with an as large and robust economy built on top of them as Ethereum has.
The ETH asset has a $203B market cap today, with many more billions worth of value based on top of the network. Ethereum is by far the largest and most robust economic ecosystem in crypto, and the security of all of this economic activity will be changed from a PoW-based to a PoS-based economy.
How Does The Merge Impact ETH And Investors?
The Merge has a massive effect on the economics of ETH. To investors, this aspect of the Merge can be outlined below:
Reducing ETH issuance
Making ETH a native yield-bearing asset
Reducing ETH issuance
The Merge will reduce yearly ETH issuance from 4.3% to 0.43%.
Thanks to the diminished need to pay Ethereum miners, Ethereum is capable of reducing yearly ETH issuance from 4.3% to 0.43%. The reduction of new ETH issuance is generally considered bullish for investors like us!
Post-merge, ETH issuance drops by over 90%, increasing the proportional magnitude of how much ETH is burnt every block.
Does The Merge Make Ethereum Green/Use Less Energy?
100%.This is one of the biggest outcomes of The Merge and PoS.
Post-Merge, Ethereum will consume ~99.95% less energy than its current usage.
PoS secures a blockchain with capital instead of energy. The only thing you’d need to secure the network is 32 ETH to stake to secure the network instead of mining rigs like the one shown below:
The shift to POS will make Ethereum one of the most environmentally-friendly financial system that the world has ever seen.
Ways To Invest In The Merge?
We are in the lead-up to one of the biggest events in the crypto space, and Ethereum has been on a fast rise as investors FOMO in before the expected Merge event next month!
With this happening, let’s outline the couple way’s you can invest in the ETH Merge below!
Buy the rumor, sell the news
Ethereum ($ETH): Ethereum is the easiest play here for investing in the merge expected next month. ETH has surged almost 100% from its lows in June and although may pull back, is one of my great long term holds for the future.
Lido ($LDO) & RocketPool ($RPL): To become a current staker in Ethereum, you need 32 ETH which is over $54,000 at today’ market value. An alternative to this is using the Lido or RocketPool liquid staking platforms for $ETH which allow you to stake less than 32ETH while still contributing to the security of the Ethereum network and while getting staking rewards in the form of a staked Ethereum token which is 1:1 with ETH (stETH). Both of these protocols tokens have rebounded 100%+ in the last month with the merge incoming soon. We will continue to hear their names in crypto news leading up to the merge next month!
Differences between Lido and RocketPool below:
Look for GPU’s to be flooding the markets in September if the merge goes through as expected. With Ethereum being GPU miners favorite coin to mine, there is uncertainty on how ETH’s shift to POS will affect the profitability of GPU mining.
Memes of the Month
Next Article
Will be keeping my eye out for new content to write about in August while market uncertainty continues. As always, send in any questions directly to me or comment below on this post what you’d like me to write about or answer next!
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