Cryptocurrencies face an unusual double whammy this week: U.S. inflation data and [hopefully] The long-awaited and often delayed Ethereum merge. Hold your breath for a roller coaster ride.
The stock market has been under pressure this year as the Federal Reserve (Fed) has tried to curb rampant inflation by raising interest rates.
Cryptocurrencies, which are also risk assets, have taken a hit. Nearly $2 trillion has been wiped out of the entire crypto market since all-time highs in November. Bitcoin is down more than 50% this year.
That decline is also driven by Crypto-Specific Issues Including Major Project Collapse Bankruptcies are spreading across the industry.
Meanwhile, the Ethereum network completes a long-awaited upgrade called a merge. This will Ethereum Blockchain from Proof of Work to Proof of Stake Model Significantly reduces the amount of energy required to operate the network.
Proponents say this could pave the way for wider use ethera token running on Ethereum.
“Cryptocurrencies face an unusual double whammy this week: U.S. inflation data and [hopefully] The long-awaited and often delayed Ethereum merge. Hold your breath for a roller coaster ride,” Nexo co-founder Antoni Trenchev said in a note Monday.
“In an age of narratives, nothing is greater than a cryptocurrency merge, and the wider world is set to reduce Ethereum’s carbon footprint by 99%,” he said.
However, analysts believe that the merger will Doesn’t necessarily speed up the Ethereum networkis not only known to be slow, but also does not reduce the fees associated with the transaction.
Still, excitement about the merger is building. Ether touched a yearly low in mid-June, so The price of the world’s second largest cryptocurrency is well above that of Bitcoin.Ether has risen more than 90% since June. Bitcoin, meanwhile, is up just over 20%, raising questions about how much of a merger is already priced in.
the federal reserve system Interest rates are widely expected to rise again next week This is another dark cloud hanging over the crypto market as the Federal Open Market Committee (FOMC) meets.
“The merger could create a ‘selling the facts’ situation in the cryptocurrency market and we should be paying attention to next week’s FOMC meeting. Bitcoin may continue to rise, but it will be fairly short-lived. Maybe,” Japanese exchange Bitbank said in a note on Monday.