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Crypto Week Ahead: ETH Merge, BTC Techs, US CPI and Fed Blackout

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Updated 12 Sep 2022

Key points:

  • Ethereum Merge Countdown
  • Bitcoin Techs
  • US CPI and Fed Blackout

An extremely important week for the cryptocurrency markets and broader financial asset classes, with the decentralised finance world, focused on the much-anticipated Ethereum (ETH) Merge. In addition, Bitcoin (BTC) is flirting with key technical analysis levels, whilst on the macroeconomic, fundamental front, Tuesday brings the release of the extremely important US CPI inflation report, whilst the Fed goes into its blackout phase.

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Ethereum Merge Countdown

All eyes this week in the world of decentralised finance are on the momentous change in the Ethereum blockchain, with probably the biggest software upgrades the cryptocurrency sector has seen, the Ethereum (ETH) Merge. This will take place between Tuesday 13th September-Thursday 15th September and should see a 99% reduction in power usage by Ethereum, in a move from a proof of work (POW) system to a proof of stake (POS) system. Check out more detail on this in our latest blog, Ethereum Merge Update, Chart and Forecast.

Bitcoin Techs

Source: IG

The Bitcoin outlook has significantly improved from a technical analysis standpoint in the past week, with the surge back higher on Friday from a swing low in early September at 18546. The fact that the market held notably above the June bear market low at 17604 has been a notable plus. In addition, the strong mid-August rally up to 25204 created a series of higher highs and higher lows to push through important bear market resistances to create a sustainable intermediate-term bottoming pattern.

The immediate challenge is to overcome the converging 50- and 100-day Moving Averages (MAs), currently in the 21950/ 22150 area. A push and hold above these resistance factors would be a more robust, intermediate-term recovery signal. Moreover, should the 50-day MA push above the 100-day MA, this would be an even stronger technical statement, highlighting further upside prospects into September and Q4 2022. Just above here, see the downtrend line from November 2021.

A more robust recovery rally above these resistance factors would open immediate threats to the August peak at 25204, then set risks higher for the May/June peaks at 31738/ 32730.
Below 18546 would quickly open the risk down to the 17604 bear market low and for a deeper bear move extension.

US CPI and Fed Blackout

The key focus for all financial market asset classes for this week from a macroeconomic data perspective is the release of the latest US inflation report, CPI data being posted on Tuesday 13th September. Given surging global price increases throughout 2022, the anticipation is for a signal that US inflation has already peaked. The core CPI data (ex food and energy) is expected to print at 0.3% month-over-month and at 6.0% year over year. Any significant disparity from these numbers will likely see a notable reaction in the price of cryptocurrencies.

This week also sees the start of the Fed blackout period, with no Federal Market Open Committee (FOMC) speakers until the next Federal Reserve Meeting and decision on Wednesday 21st September. This may well be a positive for riskier financial market assets, including cryptocurrencies, as a respite from the recent, strong hawkish messages from most FOMC speakers