Bitcoin (BTC) breaks above $22,000 to hit its highest level in nearly a month, ahead of inflation data and the Ethereum collapse.

Bitcoin broke through $22,000 and continued a week of recovery ahead of US inflation data and a much-anticipated Ethereum network upgrade.

The world’s largest cryptocurrency hit $22,341.50 as of 9:45 p.m. ET on Sunday before declining slightly, according to data from CoinDesk. Bitcoin traded at $22,203 around 4:03 a.m. ET Monday.

After dropping below $19,000 on Wednesday, the lowest level since June, bitcoin has since risen about 17%.

The rise follows a week of gains for US equities last week. Bitcoin is closely correlated with stock markets, especially the Nasdaq, and often rises when the technical index rises.

Cryptocurrency investors are eagerly awaiting August’s Consumer Price Index report, due out Tuesday, to see the direction inflation is headed, which could provide clues about future trends and future policy actions by the US Federal Reserve.

Cryptocurrencies are facing an unusual double threat this week: US inflation data and hopefully the highly anticipated and oft-delayed Ethereum merger. Hold your breath for a roller coaster ride.

Equities have been under pressure this year as the Fed raised interest rates in an attempt to contain runaway inflation.

Cryptocurrencies, which are also risky assets, have taken a beating. Nearly $2 trillion has been wiped from the entire cryptocurrency market since its November high. Bitcoin has lost more than 50% of its value this year.

This decline is also due to issues specific to cryptocurrencies, including the collapse of major projects and bankruptcies that have affected the entire industry.

Meanwhile, the Ethereum network will complete a highly anticipated upgrade, the Merge. This will shift the Ethereum blockchain from a proof-of-work model to a proof-of-stake model and drastically reduce the amount of energy required to run the network.

According to its proponents, 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 [espérons-le] the highly anticipated and oft-delayed Ethereum merger. Hold your breath for a rollercoaster ride,” Nexo co-founder Antoni Trenchev said in a note Monday.

“In an era flooded with stories, there is nothing bigger than the collapse of cryptocurrency and it is an event that the whole world should take note of, along with Ethereum’s environmental footprint that needs to be reduced by 99%. »

However, analysts have warned that the merger will not necessarily speed up the notoriously slow Ethereum network, nor reduce transaction costs.

Nevertheless, enthusiasm for the merger is growing. Since ether hit its lowest level of the year in mid-June, the price of the world’s second-largest cryptocurrency has been significantly higher than that of bitcoin. Ether is up more than 90% since June. 19, while bitcoin is up just over 20%, raising the question of how well the merger is already valued.

The Federal Reserve is also expected to raise interest rates again next week at the Federal Open Market Committee (FOMC) meeting, another dark cloud hanging over the cryptocurrency market.

“The merger could create a ‘sell the fact’ situation in the cryptocurrency market and we should still be cautious ahead of next week’s FOMC meeting. Bitcoin may continue to rise, but it may be quite short,” said Yuya Hasegawa, cryptocurrency market analyst at the stock market: Japanese Bitbank, in a note on Monday.

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