This week will be one of the most important in the cryptocurrency market for a while. Given that the industry has been event driven in recent months, it is safe to assume that volatility could increase. With that being said, let’s take a look at three big things that will happen over the next 7 days.
THE MERGE
This week, Ethereum switched to a proof-of-stake governance mechanism (also known as “The Merge”). This event will mark the end of the network’s proof-of-work era and herald a major shift in its token economy. One of the things that will be hit hard is the issuance of ETH.
Current mining is around 13,000 ETH per day while the network is running on PoW. After switching to PoS, the stake rewards will be around 1600 ETH per day after the merge. This alone reduces circulation by about 90%. In addition, With an average gas price of at least 16 gwei, at least 1600 ETH is burned every day, effectively reducing net ETH inflation to zero or less after the merge.
This is what many are calling a “triple halving”, an obvious reference to the halving of bitcoin. However, it’s also worth noting that many expect this to be a “sell the news” type of event, which could have a negative impact on the price of ETH in the short term. Regardless of the outcome, one thing is very likely – volatility will increase. At the time of writing, the merger is expected to take place on September 15.
US CONSUMER PRICE INDEX NUMBERS
The US Consumer Price Index is the most widely used measure of inflation in the country, although it does not take into account all products. This has a significant impact on the market and is often the cause of increased volatility. So far, the cryptocurrency market has been on a rampage whenever CPI numbers is released. In August, when the US Bureau of Labor Statistics released July data, the price of Bitcoin rose by about $1,000. This tends to happen in all similar cases.
It’s also worth noting that high inflation is also a reason for rate hikes, and the Fed will also make a rate announcement later this month.
Mt. GOX LAWSUITE
Mt. Gox case is one of the most iconic and influential lawsuits in the entire cryptocurrency industry. In late August, Mt. Gox Trustee – Nobuaki Kobayashi – An update on the repair plan for creditors of the defunct cryptocurrency exchange to consider. They have until Sept. 15 to file a claim for the funds they lost when the stock market crashed in 2014.
That said, it shouldn’t have a major impact on the markets, although with so much rumor and speculation surrounding the matter, it wouldn’t be surprising if it caused some turmoil. All in all, there is a lot to look forward to in the market over the next 7 days, all of which will be extremely exciting.
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