\n Text size<\/span> Cryptocurrencies have rallied over the past week, with sentiment among digital-asset investors picking up amid the prospect that prices have hit their bottom<\/a>. <\/p>\n It has been good news for <\/p>\n Make no mistake, digital assets are down in the dumps<\/a>. The three months to the end of June marked the worst quarter for Bitcoin<\/a> since 2011\u2014a year in which it crossed the $1 mark for the first time\u2014while for Ether it represented the worst quarter ever.<\/p>\n The market capitalization of cryptocurrencies has collapsed to $1 trillion from nearly $3 trillion eight months ago, with Bitcoin and Ether both trading at less than one-third of the record highs they reached in November 2021.<\/p>\n Yet the past week has seen a reversal of fortune<\/a>.\u00a0<\/p>\n Bitcoin was trading around $22,000 Tuesday, well above its bottom below $18,000 reached in the trough of a selloff in mid-June, and at its highest level since the crypto rout of a month ago brought prices crashing down from $30,000. Ether was changing hands at $1,550, with the token underpinning the Ethereum blockchain network having left its recent bottom below $1,000 far behind.<\/p>\n But the rallies for the largest and second-largest cryptos have not been equal. Bitcoin has climbed 11% from a week ago, while Ether is up 45% over the same period.<\/p>\n Ether\u2019s outperformance seems to be rooted, at least in part, in a resurgence of optimism surrounding \u201cThe Merge\u201d<\/a>\u2014which will see the process for mining the token change from an energy-intensive process called proof-of-work to proof-of-stake.<\/p>\n A major criticism of cryptos such as Bitcoin and Ether is that they aren\u2019t climate-friendly<\/a>, requiring significant amounts of energy to \u201cmine\u201d tokens using intensive computations. The mining process is what validates the decentralized ledger of transactions that underpins the blockchain. Proof-of-stake instead requires users to set aside, or stake, tokens to validate the network.<\/p>\n The date for The Merge has been pushed back multiple times, but traders seem to be taking hold of an update from Tim Beiko of the Ethereum Foundation, who said via Twitter<\/a> on July 14 that Sep. 19 was the provisional date for the update.<\/p>\n Martin Hiesboeck, the head of crypto research at trading platform Uphold, poured some cold water on the optimism following Beiko\u2019s message, noting that a date for The Merge has been announced six times before\u2014and has been delayed each time.<\/p>\n \u201cWhile the price action of Ethereum certainly gives hope for the overall market to maybe turn a corner in the next few weeks, the sudden jump is mostly motivated by hype and perhaps a lack of understanding,\u201d Hiesboeck said.<\/p>\n From a technical perspective, too, Ether\u2019s stunning outperformance of Bitcoin may not have strong legs.<\/p>\n \u201cThe bounce may be fleeting with short-term overbought conditions having returned,\u201d Katie Stockton, managing partner at technical research firm Fairlead Strategies, wrote in a note on Monday. \u201cThe downtrend remains intact.\u201d<\/p>\n \u201cEther needs more significant improvement in intermediate-term momentum to convince us a lasting turnaround is under way,\u201d Stockton added. \u201cFrom a long-term perspective, a bear market cycle has a hold with negative momentum.\u201d<\/p>\n The technical outlook isn\u2019t much better for Bitcoin, either, according to Stockton.<\/p>\n After rallying over the weekend, Bitcoin isn\u2019t back into a \u201cconsolidation phase,\u201d according to Fairlead Strategies, with prices struggling to break the 50-day moving average near $23,200 and showing few signs of improving over the intermediate term.<\/p>\n \u201cWe remain intermediate-term bearish,\u201d Stockton said. \u201cNegative long-term momentum and the downward sloping 200-day moving average increase risk beyond the near term, so we would not chase this rally.\u201d<\/p>\n Write to Jack Denton at jack.denton@dowjones.com<\/a><\/p>\n<\/div>\n<\/div>\n
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Cryptos have rallied this week, with Ether among the strongest performers.<\/h4>\n
\n Dusan Zidar\/Dreamstime
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\n Bitcoin<\/a><\/span>
\n\u2014and even better news for <\/p>\n
\n Ether<\/a>.<\/span>
\n But it might not last, according to analysts.<\/p>\n