Crypto markets were roiled by inflation data from the U.S. on Tuesday and Ethereum's successful Merge on Thursday did nothing for prices.
Bitcoin was down 8.49% at $19,832 over the past week, while ether shed more than 20% and was trading at $1,418, at the time of writing per Coinbase data.
U.S. inflation came in above estimates; the data showed a 0.1% month-on-month increase since July and a jump of 8.3% year-on-year. Estimates called for a reading of 8% year-on-year, down from the 8.5% in July, and drop of 0.1% month-on-month.
The Fed is set to make its next interest rate decision on Wednesday, with most analysts expecting a 75 basis point increase — while a 100 basis point increase hasn't been ruled out either, per the CME's FedWatch dashboard.
Macro matters and The Merge
Crypto trading firm QCP Capital wrote in its market report on Thursday that while "the inflation trend has no doubt peaked and is headed lower, it will be a long and winding road back from month-to-month as the market pendulum over-swings on either side."
QCP went on to say that market pricing for a 100 basis point hike next week is overdone on the bearish side, with the Fed likely to stick to 75 basis points.
Indeed, Fed chair Powell noted during his Jackson Hole address in August that the lower inflation reading in July was welcome, but a single month's improvement was short of what the FOMC needed to see. He went on to add that the Fed's decision in September will depend on the "totality of the incoming data and the evolving outlook."
LedgerPrime's Laura Vidiella told The Block that macro factors will continue to affect the market in the short run, as evidenced by Tuesday's slide following the U.S. CPI release.
Elsewhere, Ethereum's long-awaited upgrade, known as The Merge, was activated on Thursday without a hitch. However, the affect on markets was negligible, with prices of several adjacent tokens, including Ethereum Classic and Lido DAO’s token, briefly increasing before surrendering those gains.
Crypto trading firm Cumberland wrote on Twitter that the fact it was "successful yet uneventful" was a testament to the people involved, "what they've done for the world of crypto, digital assets, and decentralized computing. Massive congrats to the ETH core devs from Cumberland."
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