Ethereum loses momentum ahead of the September Merge
In anticipation of The Merge, the price of ETH rebounded from the $800 lows seen in June. However, the crypto lost momentum and was unable to break above the $2,000 mark, retreating to the current price of about $1,600.
This is still double the value in about two months, but some investors are worried about what this could mean for the coin in the coming months. To ease your anxiety, here are some signs that a recovery in ETH prices is still around the corner.
The Merge is almost complete
After years of planning, the Ethereum network is finally making the change in consensus mechanism to Proof-of-Stake (PoS). The date is set for 15 September, finally putting behind fears of yet another postponement.
How the shift will affect the network has been the cause of the recent volatility. For instance, while ETH is up nearly 2% over the past 24 hours, it’s still down more than 13% during the past week.
What’s not in question, though, is that a PoS network will increase project development on the Ethereum network, and this will increase the value of the coin. Therefore, you are almost guaranteed a spike in prices next month.
Investors’ fear is abating
According to the CNN Business Fear & Greed Index, investor sentiment has changed from Fear a month ago to Neutral. This was after economic data showed that inflation had finally slowed in July thanks to higher interest rates set by the Fed.
Since central banks around the world are doing the same, there’s hope that rising inflation globally will finally be reined in.
Fed may become more dovish
For two consecutive Fed rate decisions, the institution has raised interest by 75 basis points. It had been widely expected that the Fed would continue to do so in September, but the positive inflation data may cause the institution to raise rates by 50 basis points instead.
Slightly lower rate hikes make riskier assets such as stocks more attractive than treasuries. And since cryptos have shown a correlation to stocks, the same is expected to happen for Ethereum.