Cryptocurrency market capitalization has fallen 15% over the past seven days, dropping from $1.69 trillion to $903 billion at the time of writing.
Most of the losses occurred on Sunday 18th September, with a steady increase in outflow from mid-morning (UTC). This pattern continued into Monday morning, with a significant early dip.
After reaching $900.9 billion, it hit a local bottom at 08:00 (UTC), marking a nine-week low. Since bottoming out, capital inflows of around $3 billion have re-entered the market.
Now that the merge is complete, what’s next for crypto?
On the crypto front, the most important event to occur over the past week has been the Ethereum merge.
After months of hype, the merge was completed on September 15th at approximately 07:00 UTC. The event was polarizing, with some proponents arguing it would lift the rest of the market higher. have not improved their “performance, operating costs and liquidity”.
Claims that Ethereum is now considered a security and perhaps most concerning is the centralization of the network, where just two nodes now control 46% of transactions.
Since then, Ethereum has lost 21% of its value, falling from its $1,640 price, buying classic rumors and selling news events.
youtuber Lark Davis recently commented that there are no similarly hyped events to prop up the crypto market for the rest of the year.
Similarly, there was little progress on the macro front. The pressure on household incomes from rapid inflation and the subsequent pressure to raise interest rates remains the dominant narrative.
The Federal Open Market Committee (FOMC) is scheduled for the next day. Tuesdaymany expect a rate hike of 75 basis points.
However, it is clear that inflationary pressures have not been contained, with recently released consumer price index data showing inflation rising 0.1% in August.
Chief Investment Strategist at Yardeni Research, Ed Yardenirecently commented that the Fed should “get it done” and implement a 100 basis point rate hike.
The upcoming FOMC will be a pivotal point for the market. The cryptocurrency sell-off could be attributed to market participants pricing the looming interest rate hike.