All eyes are on the next Fed meeting, which will be on September 21. At that meeting, interest rates are likely to go up again.
The Ethereum merged on Thursday gave everyone a sugar high, but both the newly miner-free ETH and the most popular cryptocurrency, Bitcoin, lost money over the weekend.
As of this writing, Ethereum’s price has dropped from $1,580 before the merge to $1,293. This is after a sharp drop of 7% in the hours after the merger and a 16% drop overall by late Sunday.
The other hand, Bitcoin, on the other hand, fell to $19,414 on Friday, but on Saturday it rose briefly and went above $20,000. The boost didn’t last long, though. As the weekend came to a close, the largest cryptocurrency by market cap went back to its Friday lows.
For the week, Ethereum was down 23% and Bitcoin was down 11%. The drops are similar to those seen last week, when overall economic indicators such as the Consumer Price Index, as well as the Nasdaq and S&P 500, fell.
But the fact that Ethereum’s value has gone down since the merge goes against what some analysts said right after the upgrade: that the effect of the merge on ETH’s value had already been priced into the market.
Some people had predicted a “merge surge” before the change, but the momentary rise in the price of ETH went away quickly. Doctor Profit, a well-known crypto Twitter commentator, said today that he had sold all of his Ethereum.
At the weekend, there were also reports of the first “replay attack” on the Ethereum blockchain and the EthereumPoW blockchain, which recently split off from Ethereum. As with the wrong blockchain setting that slowed down the merge for a short time, this exploits happened because the chainlink ID wasn’t checked to see which blockchain a transaction was happening on.
As for bitcoin, its total market cap was heading back toward its six-week low of $18,661 on September 6. This was a place I hadn’t been to since the end of June. On Sunday, the total value of Bitcoin on the market fell back below $375 billion for the first time since September 6. Before that, it hadn’t been below that level since July 13.
Doctor Profit, whose main claim to fame is saying that Bitcoin’s “ultimate bottom” will be $18,000 as early as April 2021, said that “the bottom is being formed” and that the price will probably be between $18,000 and $25,000 until March of next year.
But he warns that a lot will depend on what the U.S. Federal Reserve does next. Doctor Profit thinks that Bitcoin’s price can handle an increase in interest rates of 0.75 basis points, but a full 1 basis point will mean “we see blood.”
The last meeting of the Federal Reserve, in July, led to a 0.75% increase. In the next meeting, which will be on Sept. 21, there will probably be another increase. The main question is how much of an increase there will be. Some people think that Federal Reserve Chairman Jerome Powell will say that interest rates will go up by 1%.