Crypto wrap: 'Merge' in focus, inflation figures still key, say experts

business-standard.com:

The crypto market saw a bearish week, with Bitcoin falling nearly 10 per cent in the last seven days. The largest crypto token by market capitalisation was trading at $21,750 on Friday, according to coinmarketcap.com. On Monday, it had briefly hit the $ 25,000 mark.

Ethereum, the second largest cryptocurrency, was down nearly 8 per cent in the last seven days. It was trading at $1,741 on Friday.

"For the entire week, crypto markets traded in red thanks to the profit booking, which kept the investors on tenterhooks for the strong upside in the recent days," said Raj A Kapoor, founder and CEO of India Blockchain Alliance.

Experts said that the investors would look forward to the upcoming 'Merge' announced by Ethereum. "For Ethereum, updates on the upcoming 'Merge' is the key," Kapoor said.

The Merge is a software upgrade after which the miners can use a proof-of-work (PoW) method to "stake" their coins and create new blocks without actually mining them.

Unlike the older method, where the miners need to solve computational problems to win newly minted coins, it is expected to bring down the power consumption level by 99.95 per cent, according to a report by Bloomberg.

"Open interest for Ethereum options crossed $8.2 billion, surpassing Bitcoin's $5.4 billion as derivatives traders place directionally obvious bets for Ethereum pertaining to the upcoming Merge scheduled for September 19," CoinDCX's research team told Business Standard.

"We expect the movement to be in the positive direction as the most widely used blockchain is shifting to a more efficient mechanism of proof-of-stake (PoS)," Kapoor added.

Inflation still key

"Bitcoin has reacted to quantitative tightening measures over the past few months as other digital