BTC, ETH Lead Rally As ‘Merger’ Date Announced; risk event ahead

Crypto Key Points:

  • BitcoinPrice yesurge 20%, Ethereal up to 50% Aboss Hhistorical mevent.
  • Collective gains push the total crypto market capitalization back above $1 trillion.
  • Bitcoin Short term outlook remains bullish, Fed meeting is key.

Bitcoin, Ethereum and Alt-Coins: A Brief History of Crypto Winters

It has been a week full of shocking news headlines allowing volatility to build, while we are one week away from the long-awaited US Federal Reserve Meeting on the 27ththe July. Bitcoin and the crypto market in general have seen strong momentum over the past week, driving Bitcoin (BTC)up its consolidation range hits highs of $23,000 creating a new high of $24,200.

The relief in the market is reflected in the increase in futures premiums. Offshore premiums are in line with early July levels but remain compressed, suggesting cautious sentiment.The Fear and Greed Index has risen from the extreme fear area after a record breaking streak of 74 days of extreme fear.in what could be another sentiment boost for the ailing crypto space.

Crypto Forecast: BTC, ETH Lead Rally As 'Merger' Date Announced;  risk event ahead

Source: Arcane Research

Massive Ethereum Boost, Is ‘The Merge’ Driving The Rally?

strong, weekly, profits were seen by Ethereum (ETH)which is up more than 50 percent since last weekwith a maximum of $1,646. The second most valuable cryptocurrency in the world was boosted by news of an event known as the fusion has a tentative date to go live, the week of September 19.This will cause Ethereum to change from a proof-of-work system to a proof-of-stake systemreducing network power consumption by approximately 99.95 percent.

The developers of the cryptocurrency describe it as “the most significant update in the history of Ethereum”showing a commitment to ensure it can stand the test of time That’s the story people might be buying.

Fundamental Risks

However, it is important to recognize that ‘The fusion’ The event remains a risky trade and there are long-term regulatory and technological risks facing crypto. Long-term risks continue to persist in the crypto space, with the most notable being regulation and the uncertainty surrounding it, as well as technical glitches in the system.

The proof of this is in the new historic agreement reached by the European Parliament at the end of June to regulate cryptocurrencies. As part of the new rules, transfers of bitcoin and other crypto assets will be subject to the same money laundering regulations as traditional bank transfers.

The Fed Meeting Will Have a Key Catalyst for Cryptocurrencies in the Week Ahead

A decision of Federal Reserve Wednesday on interest rates could hold the key to Bitcoin and the global markets.The Ddips in crypto have been due in part to cracks in the digital asset market, including the collapse of stablecoin Terra and the failure of high-flying hedge fund Three Arrows Capitalweather a correlation with stocks has not helped.Having shown to be highly correlated with other risk-sensitive assets such as stocks, Bitcoin (BTC) and other tokens have followed the S&P 500 and Nasdaq Composite into bear market territory this year as investors fret over macroeconomic pressures.

Facing the highest inflation in four decades, the Federal Reserve has already moved aggressively to raise interest rates in a bid to rein in red-hot prices., but this risks provoking a recession. It would seem as if building the groundwork for a trend reversal, but the market needs a bit more safety that the Fed is going to moderate the pace of interest rate hikes in the US.

BTCUSD daily chart

Crypto Forecast: BTC, ETH Lead Rally As 'Merger' Date Announced;  risk event ahead

Font: TradingView, frame Prepared by Zain Vawda

final thoughts

Electric car maker Tesla sold $936 million worth of bitcoin, or 75% of its holdings, in the second quarter.. The market reaction following the announcement once again showed Bitcoin’s resilience as, despite an initial drop, we climbed above the $22,800 consolidating range. The short-term outlook for Bitcoin remains bullish, if we stay below above the $22,800 level heading into the weekend, we could see a bounce to $25,000 before peaking in the $29,000 area before Wednesday’s FOMC meeting starts. The expectation would be that such a bullish move would drag altcoins along for the ride.

— Written by Zain Vawda for DailyFX.com

Contact and follow Zain on Twitter: @zvawda

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