Market Trend 11/7 - 17/7｜ETH spikes ahead of Merge, BTC back to the start

2022-07-18, 01:28

In the last market trend, data described showed that crypto liquidations and negative market conditions had “purged tourists” from Bitcoin and other digital assets, while DeFi altcoins continued to rise as long-term holders accumulated. On the macro side, details from the Federal Reserve’s FOMC Meeting Minutes showed apprehension about easing inflation measures, with governors voting for further rate hikes.

Over the last week, however, the scenario showed great optimism for crypto - especially for Ethereum ahead of the Merge update, pushing the crypto to large weekly gains with the main DeFi altcoins piggybacking on the momentum. Bitcoin went back to the weekly start after being overshadowed by Ethereum, posing little to no upside over the 7-day period. Macro-wise, stocks and crypto briefly celebrate as the Federal Reserve points to another 75 bps rate hike - instead of the expected 100 bps. Inflation data, however, continues to break bad records.

Despite some negative news, the week has been overwhelmingly positive for crypto as Bitcoin consolidation shows great support for the $20k mark. Looking out for the Federal Reserve’s actual rate hike will play a massive role in the upcoming weeks, as it can change its mind about the 75 bps measure.

ETH Merge update spikes the asset

Ether price over the week. Source: CoinGecko

Evan Van Ness’ partial tweet on the upcoming Ethereum deployments. Source: Twitter.

After plenty of speculation over the past year, we finally have a date: According to Evan Van Ness, founder of ETH News and contributor to the protocol, the Ethereum Merge is scheduled for full deployment on September 19th. Van Ness did make sure to explain that such a date was presumed based on the block number of the network, which can fluctuate by give or take a few days.

The date release sent ETH to a 10.8% gain over the week, 9.4% of those in just the last 24 hours. The Merge update will change the Ethereum network from a Proof of Work (PoW) mechanism to a Proof of Stake (PoS), making the blockchain faster and reducing energy consumption by a whopping 99.8%.

BTC sidelines back to weekly start

BTC results from the past week. Source: CoinGecko

With ETH and its upcoming Ethereum Merge update in the spotlight, Bitcoin was overshadowed by the asset and maintained a heavily volatile, but low-loss week compared to the second largest crypto. Opening the week at $21.091 and closing at $21.189, BTC barely scratched the surface of ETH and its DeFi counterparts over the week, registering a total weekly loss of -2.0%.

Is it time for Ethereum to overtake the lead? Not at all, but Ethereum will certainly shine for a few more weeks and perhaps months if the Merge is proven successful. We might also see an “altcoin season” soon, as DeFi and NFTs will certainly hitch a ride on the Ethereum network bandwagon after the Proof of Stake deployment.

Inflation continues to break records

Example of inflated prices from June 2021 and 2022 CPI’s. Source: Statista

On the macro side, things aren’t looking all too bright for American inflation. The last Consumer Price Index (CPI) data showed a 9.1% per cent Year-on-year (YoY) result - the highest for the Index in over 41 years. On the bright side, Federal Reserve Chair Powell and Governor Bailey showed support to keep the next rate hike at 75 bps, the same as last month instead of the expected 100 bps. It might be early to celebrate though, as both officials stated they might change their position if inflationary measures continue to surpass expectations.

Author: Gate.io Researcher: Victor Bastos
* This article represents only the views of the researcher and does not constitute any investment suggestions.
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