Crypto Market Forecast: Midweek Update 8th September

• The Bitcoin price has dipped this week and is down by ~2.5%. On Wednesday, BTC reached US$18,760.16 on the Bitcoin Liquid Index (BLX), a two-month low.

• The apparent trigger for the fall was a new release of stronger-than-expected economic data from the United States. This increases the likelihood that a sharp interest rate spike will be issued when bankers from the US’s Central Bank, the Federal Reserve, meet later this month.

• The Institute for Supply Management (ISM) said this week its non-manufacturing PMI picked up again in August, the second straight month, after three consecutive months of dropping off. The data eases medium-term recession concerns.

• These numbers suggest that supply bottlenecks and price pressures are easing in the US. The ISM’s services PMI is an indicator of the overall economic condition for the non-manufacturing sector. It collects data from Business activity, New Orders, Delivery, and Supplier Deliveries.

• Parallel to the fall in Bitcoin markets, major stock indices—the Dow Jones Industrial Average, the S&P500, and the Nasdaq composite all had difficult weeks. There appears to have been a flight away from perceived risk assets and towards the high-interest rate dollar.

• The CME Fed Watch monitoring has increased the odds of a high 0.75% interest rate hike to 74%. In the last fortnight, the US dollar hit a twenty-year-high after Federal Reserve Chairman Jerome Powell made comments that America’s Central Bank would “forcefully” tackle inflation with interest rates.

Altcoin Watch

• It has been a difficult seven days for altcoin markets with investors turning risk-off and dollar strength pushing towards safer investments. A few assets bucked this bearish trend including EOS (EOS), Cardano (ADA), and Chainlink (LINK).

• The Cardano blockchain is set to undergo a major network update, Vasil, on September 22nd. The Vasil upgrade aims to make the network, faster and less expensive.

• Cardano founder Charles Hoskinson has taken to Twitter this week to blame macro factors for the price underperformance of Cardano and other crypto projects. In Hoskinson’s view, Cardano and many other crypto projects are in the strongest fundamental positions ever.

• Vasil will specifically focus on increasing throughput on the Cardano chain. It will do this through a technology called diffusion pipelining, which will increase block sizes and the efficiency of block propagation.

What We’re Looking At: The Merge Upgrade Begins

The Merge upgrade officially kicked off on September 6th with the Bellatrix upgrade. As Ethereum founder Vitalik Buterin explained on Twitter “The merge is still expected to happen around Sep 13-15. What’s happening today is the Bellatrix hard fork, which prepares the chain for the merge. Still important though – make sure to update your clients!”

It is important to note that the Beacon chain was shipped separately from the Ethereum mainnet chain and the Merge. It has been running independently and parallel to other assets within the Ethereum ecosystem. The Merge is when it will integrate with other assets within the ecosystem.

The Ethereum foundation states that the Merge will be “the most significant upgrade in the history of Ethereum.” The Merge will witness the joining together or ‘merging’ of the execution layer, Ethereum as we know it today, with a consensus layer called the Beacon chain.

The Bellatrix upgrade readies the existing Ethereum PoS Beacon chain to merge with the Ethereum mainnet layer. The Ethereum mainnet layer is the Ethereum that the crypto ecosystem is familiar with and has been using since 2016. When the Merge is completed in mid-September the Beacon chain will become the official consensus layer when interacting with Ethereum and the current mainnet will become remodeled purely an execution layer.

The Bellatrix upgrade occurred on Epoch 144896 and occurred on 6th September at 11:35UTC. Terminal Total Difficulty (TTD) represents the cumulative difficulty of all Ethereum blocks mined. TTD value triggering the Merge has been set at 58,750,000,000,000,000,000,000. This is expected to occur between the 13th-16th September. The way the transition is that the difficulty level of the current Ethereum PoW mainnet will increase to a point where mining new blocks will no longer be possible.