Bitcoin just reached its three-week high. The market value of the currency continued to rise as the market sentiment appears to have, at least for the time being, improved.
As of 12:20 p.m. in New York, the number-one cryptocurrency by market capitalization had risen as much as 3.9% and was trading just over $22,000. Ether trailed behind while smaller currencies like Solana and MATIC also grew.
On September 9, Bitcoin saw a 10% increase as part of a larger embrace of undervalued assets supported by a weaker dollar.
The sudden market optimism for Bitcoin could be due to September 4th’s report about the decrease in job growth announced by The United States Labor Department.
This can be interpreted as a sign that the Federal Reserve’s many initiatives involving raising interest rates in the country in an effort to curb inflation after the epidemic are beginning to bear fruit.
The fact that the United States Federal Reserve has not made any new announcements about raising interest rates in the past few days might also be a good indication of the current market optimism regarding cryptocurrencies.
CPI Data Announcement
However, tomorrow is a crucial day for cryptocurrencies. This Tuesday will see the publication of August’s U.S. inflation statistics.
Given the result of the report, the Federal Reserve could maintain a high-interest-rate policy, which would certainly affect Bitcoin.
It is anticipated that the headline price pressures will be reduced in the US inflation data to be released on Tuesday. However, a harsher-than-expected report would increase support for constrictive monetary policies that are bad for the price of cryptocurrencies.
Over the previous 12 months, the CPI in August likely increased by 8.1%. The rate would be down from 8.5% in July and a four-decade high of 9.1% in June, and it would be the second consecutive monthly reduction.
Ethereum Merge Could Affect Bitcoin
Despite the fact that the two cryptocurrencies usually follow each other on large price movements, that might not be the case this week.
As Ethereum gets closer to the merge, market sentiment towards Ethereum could negatively affect Bitcoin.
After the merge, Ethereum will be moved on from proof-of-work consensus, meaning that Bitcoin will be responsible for the vast majority of cryptocurrency mining in the world.
Only 23% of all market volume will consist of “proof-of-work” with Bitcoin being responsible by nearly all of it.
As government regulators look for a way to sanction and control cryptocurrency, targeting the energy use required for PoW will likely be the first move.