Bitcoin hit $22,000 as it continues a week-long rally ahead of US inflation data and a long-awaited Ethereum network upgrade.
The world’s largest cryptocurrency hit $22,341.50 at 9:45 p.m. ET on Sunday before falling slightly, according to CoinDesk data. Bitcoin was trading at $22,203 around 4:03 a.m. ET on Monday.
After falling below $19,000 on Wednesday to its lowest level since June, bitcoin has since risen about 17%.
This also comes on the back of a winning week last week for US stocks. Bitcoin has been closely linked to stock markets, particularly the Nasdaq, and often moves higher when the tech-heavy index rises.
Crypto investors are looking ahead to the August consumer price index report, scheduled for release on Tuesday, to see the direction of inflation that could hint at future policy moves by the US Federal Reserve.
Crypto faces an unusual double whammy this week: US inflation data and [hopefully] The long-awaited and oft-delayed Ethereum merger. Hold your breath for a roller coaster ride.
Antoni Trenchev
co-founder, Nexo
Stocks have been under pressure this year as the Fed has raised interest rates in an effort to control rampant inflation.
Cryptocurrencies, which are also risky assets, have taken a beating. Nearly $2 trillion has been wiped from the entire crypto market since its all-time high in November. Bitcoin is down more than 50% this year.
This decline has also been driven by crypto-specific issues, including the collapse of major projects and bankruptcies that have spread throughout the industry.
In the meantime, the Ethereum network will complete a long-awaited upgrade called unification. This will transform the Ethereum blockchain from a proof-of-work model to a proof-of-stake model and will 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 faces an unusual double whammy this week: US inflation data and [hopefully] The long-awaited and oft-delayed Ethereum merger. Hold your breath for a roller coaster ride,” said Antoni Trenchev, co-founder of Nexo, in a note on Monday.
“In a time full of narratives, there is no one bigger than Merge in crypto and it is something the wider world should consider with Ethereum’s carbon footprint set to decrease by 99%.
However, analysts cautioned that the merger will not necessarily speed up the Ethereum network, which is notoriously slow, nor will it lower the fees associated with transactions.
However, excitement has grown for the merger. Since ether hit its low for the year in mid-June, the price for the world’s second-largest cryptocurrency has far outpaced bitcoin. Ether is up more than 90% since June. 19 while bitcoin is up just over 20%, begging the question of how much the merger is already worth.
The Federal Reserve is also widely expected to raise interest rates again next week when the Federal Open Market Committee (FOMC) meets, which is another dark cloud hanging over the crypto market.
“The meltdown could cause a ‘sell the fact’ situation in the crypto market, and we still need to be wary of next week’s FOMC meeting. Bitcoin may continue to rise, but it may be quite short-lived,” Yuya Hasegawa , crypto market analyst at Japanese exchange Bitbank, said in a note on Monday.
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