Bitcoin briefly surpassed $22,000 this week and continued to climb ahead of US inflation data and the Ethereum network “merger”.
On Tuesday, the August CPI report will be released, which will allow investors to understand where inflation is headed and try to predict the future actions of the US Federal Reserve System (Fed) in relation to interest rates.
Previous rate hikes by the Fed, trying to curb inflation, have hit the stock market. In turn, the cryptocurrency, which belongs to the risky asset category, has lost nearly $2 trillion in capitalization since its November high. Bitcoin has lost more than 50% in price since the beginning of the year.
The “fusion” of the Ethereum network, that is, the transition of the Ethereum blockchain from the proof-of-work model to the proof-of-stake model, will significantly reduce the energy expenditure for their operation. Ethereum supporters hope this will present an opportunity to expand cryptocurrency adoption, with experts warning that the “merger” won’t necessarily speed up the Ethereum network and is unlikely to lower fees associated with transactions.
Against the backdrop of expectations, Ethereum, which hit a yearly low in mid-June, far outpaced Bitcoin in terms of growth. Since June 19, it is up more than 90%, while Bitcoin is up around 20%.
However, cryptocurrency growth may end soon as the Fed is expected to hike rates again next week, which will cause the market to contract.