Recent CPI Report Shows that US Inflation Slowed to 8.5% in July. This will for sure take pressure off the Federal Reserve to hike rates at the September meeting. Hiking federal reserve has alway had a negative effect on Bitcoin and cryptocurrencies prices.
That is why it seems that crypto markets responded favorably after the current CPI report. Bitcoin (BTC) price and Ethereum (ETH) price show positive signs and increase after the report, leading the border market to rise. This is signaling relief to those crypto traders that the Federal Reserve will relax its aggressive approach. This could potentially create a more comfortable environment for risky assets such as cryptocurrencies that could lead to a bull market in which crypto prices rise.
Matt Maley, chief market strategist at Miller Tabak & Co. believes that the rise in crypto market was expected and these assets can go even further.
“The CPI report should mean the Fed will be less aggressive. A less-aggressive Fed should be bullish for the cryptos, I’m surprised they’re not rallying more.”
While CPI report has for sure a big part in Eth price breaking 1800 level, it cannot be ignored that the upcoming Merge Update has also created positive feelings in traders and investors. Ether’s native token, is the second-largest cryptocurrency by market capitalization and always has a leading role in the border market.
Ethereum is currently at its highest level since early June. Many traders and investors call it the digital-asset market darling. The highly-anticipated Merge is nearing after years of delays. This update will transition Ethereum verification protocol from Proof of Work to Proof of Stake.
Based on the onchain data, the jump in transactions and active addresses can indicate the market's support for the price increase. However, it is worth noting that over the past few weeks, the price of crypto assets have increased, but the number of transactions and active addresses has decreased. This clearly indicates a negative divergence in the market.
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