Bitcoin in the face of The Merge and FED policy

The oldest cryptocurrency has a flat price chart in the face of The Merge and FED policy

The weekend rally on the Bitcoin (BTC) chart has cooled off early in the new week as investors await important US inflation data and monitor a key Ethereum (ETH) blockchain update called The Merge. Both events are extremely important and have the potential to significantly increase volatility in the cryptocurrency markets, including the BTC valuation.

Bitcoin hovers around $ 22,000 on Monday

The largest cryptocurrency in terms of overall market capitalization rose by more than 3% on Monday, briefly reaching $ 22,000. At the time of writing this article, however, it is slipping closer to the session opening levels. However, this does not change the fact that the BTC / USD ratio managed to beat the 50-day moving average and stay above it for the first time in almost a month.

Bitcoin has had an extremely intense rally, which began on September 7 after the local lows test at the level of $ 18,500. Since then, the oldest cryptocurrency grew five consecutive days in a row, and strengthened the strongest on Friday, when during one session it gained over 10% in value.

Higher-than-forecast inflation in the US, the data of which will be announced on Tuesday, may strengthen expectations regarding restrictive monetary assumptions, which have been a big obstacle for the prices of all cryptocurrencies for a long time. Any shocks to the Ethereum update at the end of last week - the most important cryptocurrency network in terms of decentralized finance - can also sow a lot of anxiety in the market.

The Ethereum update affects the interest of investors

The ever-increasing cost of loans along with the problems of lenders and cryptocurrency funds caused Bitcoin, Ethereum and the wider MVIS CryptoCompare Digital Assets 100 Index market to suffer losses of over 50% in 2022.

Ether, the native token of the Ethereum network, is now particularly strongly in the spotlight of investors due to the significant change in the consensus mechanism and the shift to a more energy-efficient blockchain, a process known as The Merge.

"We remain bullish on ETH in the face of The Merge, using declines as buying opportunities," wrote Sean Farrell, Head of Digital Asset Strategy at Fundstrat Global Advisors LLC. He also added that Ethereum had not succumbed to "selling the facts" after three previous network updates.