- Bitcoin is briefly above $22,000 as it continues a week-long rally ahead of US inflation data and a much-anticipated Ethereum network upgrade.
- The Ethereum network will complete a long-awaited upgrade this week called Merge. It will transform the Ethereum blockchain from a proof-of-work to a proof-of-stake model.
- However, the Federal Reserve is also widely expected to raise interest rates again next week, adding to another dark cloud hanging over the crypto market.
Bitcoin held above $22,000 on Monday as it continues a week-long rally ahead of US inflation data and a much-anticipated Ethereum network upgrade.
The world’s largest cryptocurrency was trading at $22,290.75 at around 11:00 a.m. ET, according to data from CoinDesk.
After falling below $19,000 on Wednesday, its lowest level since June, bitcoin is up nearly 17%.
It also comes after a winning week last week for US stocks. Bitcoin has had a close relationship to equity markets, particularly the Nasdaq, and often moves higher when the tech-heavy index rises.
Crypto investors are waiting for the August Consumer Price Index report, which is due to be released on Tuesday, to see which direction inflation is headed, which may indicate future policy moves by the US Federal Reserve.
Stocks have been under pressure this year as the Fed raised interest rates largely to try to control inflation.
Cryptocurrencies, which are also risky assets, have been decimated. Nearly $2 trillion has been wiped out from the entire crypto market since its all-time high in November. Bitcoin is down more than 50% this year.
That decline has also been fueled by crypto-specific issues, including the collapse of major projects and industry-wide bankruptcies.
Meanwhile, the Ethereum network will complete a long-awaited upgrade called Merge. This will switch the Ethereum blockchain from a proof-of-work to a proof-of-stake model and significantly reduce the amount of energy required to operate the network.
Proponents say this could pave the way for wider use of ether, the token that runs on Ethereum.
“Crypto is facing an unusual double whammy this week: US inflation data and [hopefully] The long awaited and often delayed Ethereum merge. Hold your breath for the rollercoaster ride,” Nexo co-founder Antoine Trenchev said in a note on Monday.
“In a time full of narratives, there is no one bigger than Merge in crypto and this is one that the wider world should notice with Ethereum’s carbon footprint reducing by 99%.”
However, analysts cautioned that the merge would not necessarily speed up the Ethereum network, which is considered slow, nor would it reduce the fees associated with the transaction.
Still, enthusiasm for the merger is growing. Since ether hit its lowest level for the year in mid-June, the world’s second largest cryptocurrency has been priced far higher than bitcoin. Ether is up over 90% since June. 19 While bitcoin is up by over 20%, that begs the question of how much the merge has already cost.
The Federal Reserve is also widely expected to raise interest rates again next week when its Federal Open Market Committee (FOMC) meets, another dark cloud hanging over the crypto market.
Crypto market analyst Yuya Hasegawa said, “The merge could trigger a ‘sell of fact’ situation in the crypto market and we still need to be careful for next week’s FOMC meeting. Bitcoin may continue to rally but it is fairly short-term.” Maybe.” Japanese exchange BitBank said in a note on Monday.
Credit: www.cnbc.com /