A week-long rally by Bitcoin has reached $22,000 as it heads into U.S. inflation statistics and an eagerly awaited upgrade to the Ethereum network.
According to data from CoinDesk, the biggest cryptocurrency in the world reached $22,341.50 around 9:45 p.m. ET on Sunday before significantly declining. Around 4:03 a.m. ET on Monday, Bitcoin’s price was $22,203.
The price of bitcoin has increased by about 17% from Wednesday, when it dropped below $19,000 and reached its lowest point since June.
This follows a successful week for American stocks the previous week. Bitcoin frequently increases in value when the Nasdaq, an equities market index that is heavily influenced by technology, rises.
Investors in cryptocurrencies are anticipating the release of the August consumer price index report on Tuesday to see where inflation is headed and potentially get a signal about potential future U.S. Federal Reserve.
As the Fed raised interest rates this year in an effort to rein in spiraling inflation, stocks have been under pressure.
The value of cryptocurrencies, which are risk assets, has been severely damaged. Since its all-time high in November, the cryptocurrency market has lost about $2 trillion in value. Over 50% of Bitcoin’s value has been lost this year.
Additionally, crypto-specific problems including the failure of important projects and widespread bankruptcies in the sector have contributed to the fall.
In the meantime, the merge, a long-awaited improvement to the Ethereum network, will be finished. As a result, the Ethereum blockchain will switch from a proof-of-work to a proof-of-stake paradigm, drastically lowering the amount of energy needed to keep the network running.
According to supporters, this might open the door for a wider use of ether, the token that powers Ethereum.
“Crypto faces an unusual double whammy this week: U.S. inflation data and [hopefully] the long-awaited and oft-delayed Ethereum Merge. Hold your breath for a rollercoaster ride,” Nexo co-founder Antoni Trenchev stated in a note on Monday.
“In a time awash with narratives, there’s none bigger than the Merge in crypto and it’s one which the wider world should take notice of with Ethereum’s carbon footprint set to be slashed by 99%.”
Analysts have issued a warning, however, that neither the merging of the two networks will definitely speed up the well-knownly slow Ethereum network nor will it lower transaction fees.
Still, anticipation for the merger has grown. Since mid-June, when ether hit its yearly low, the price of the second-largest cryptocurrency in the world has increased far faster than that of bitcoin. Since June, ether has increased by more than 90%. 19 The question of how much the merger has already been priced in is raised as bitcoin has increased by slightly over 20%.
Another ominous cloud looming over the cryptocurrency market is the Federal Reserve, which is generally anticipated to raise interest rates once more when its Federal Open Market Committee (FOMC) meets the following week.
“The Merge may trigger a ‘sell the fact’ situation in the crypto market and we still need to be careful for next week’s FOMC meeting. Bitcoin could continue to rally but it could be quite short lived,” Yuya Hasegawa, a cryptocurrency market analyst at the Japanese exchange Bitbank, stated in a note on Monday.