After a strong weekly close, Bitcoin opened with its head high on Monday, briefly rising to tap $22,000 during the Asian session. Last week, the world’s largest cryptocurrency plunged as low as $18,500 before recovering by over 17%. As of writing, Bitcoin was trading at $20,071 after a 1.66% rise in the past 24 hours.
On the other hand, Ethereum remained hushed as investors kept their stakes low ahead of the Merge. As of writing, the crypto-asset was trading at $1,618 after gaining 0.84%, with several so-called “Ethereum killers” like Solana and Cardano surging by roughly 2% in the past 24 hours.
With the Merge -an event that will transition Ethereum from a proof of work to a proof of stake blockchain – less than minutes away, investors seem to have taken a step back, fearing that it may spark a “buy the rumour sell the news” scenario resulting in wild volatility by cryptocurrencies.
According to IntoTheMoneyStocks founder Gareth Soloway, short-term crypto prices will be determined by how smooth the merge goes.
“It’s going to be interesting to see how the merge goes. For the whole Bitcoin and crypto sector, I think this is a big test. A lot of people are sitting on the sidelines and saying okay, this is the biggest thing we’ve had in crypto in a while, can they pull it off without a hitch?” Gareth said in an interview with AltcoinDaily on Monday. To him, a smooth and successful event could spark a relief rally for Ethereum. He, however warned that such a rally could be shortlived with the general outlook on Bitcoin and other risk assets remaining suppressed.
“With support at $1,450 level, if the merge goes smoothly, it could prop as high as $2000.” He added. “I ultimately think if bitcoin is going down, risk assets will see more selling. Ethereum will have another leg down and it needs to retest the lows around that $880 to $900 level, maybe lower.”
However, despite those worries, most investors remain stoked by the event and are bullish post-merge. “Most people are going to sell right after it goes live, but it’ll be a mistake,” said Jesse Eckel, founder of the $1 To $1 Million Project. “Hype isn’t what makes The Merge bullish; it’s the fundamental shift in economics moving forward. Ethereum + time is going to end up being the winning play long term.”
Investors are also keeping an eye on this week’s economic data, with CPI and Crude Oil Inventory reports taking centre stage. Tuesday’s Consumer Price Index “CPI” data will mainly affect how the Fed tackles the sky-high inflation during the upcoming FOMC meeting. A drop in August CPI figures could ignite a bullish momentum for Bitcoin, while higher-than-expected figures could further harden the expectations of a lesser restrictive monetary policy by the fed, stifling markets.