(Kitco News) - The cryptocurrency market got the week started off on the right foot as Monday saw Bitcoin (BTC) reclaim support at $22,000 for the first time since Aug. 19 as a weakening DXY led to gains across global financial markets.
Data from TradingView shows that the price of Bitcoin began to increase in the early trading hours and accelerated to a daily high near $22,500, where bulls now battle bears in an attempt to flip resistance into support.
BTC/USD 4-hour chart. Source: TradingView
The early morning gains were addressed in the morning Bitcoin update from Senior Kitco Market Analyst Jim Wyckoff who noted that the three-week high in BTC price has negated a price downtrend on the daily bar chart.
"Recent upside price action suggests a near-term market bottom is in place and that prices can continue to work sideways to higher in the near term," Wyckoff said.
As for what to look for to confirm a bullish outlook moving forward, independent market analyst Michaël van de Poppe suggested that the BTC price needs to hold above $21,600 in the near term before attempting to challenge resistance at $23,300.
When it comes to #Bitcoin, I'd preferably want to see it hold above $21.6-21.8K for now.
— Michaël van de Poppe (@CryptoMichNL) September 12, 2022
Then, the next resistance can be found around $23.3K and then we can be seeing sideways action & strength on altcoins.
For now, trend is up for #Bitcoin. pic.twitter.com/33Cd9TOk2Z
On the flip side, market analyst and pseudonymous Twitter user il Capo of Crypto warned that the current gains are nothing more than a bear market short squeeze that could soon see BTC price plummet once again.
Most people getting bullish now. Remember that this is a short squeeze, a bounce that happens during a bear market to continue the downtrend afterwards.
— il Capo Of Crypto (@CryptoCapo_) September 12, 2022
I still expect a little bit higher (22500-23000), but soon I will turn full bearish again.
Ethereum Merge arrives on September 15
The major story in crypto this week is the Ethereum (ETH) Merge, which is scheduled to take place in less than three days, around 12:00 GMT or a little after on September 15.
The hype around the Merge has benefited the price of Ether, which has climbed 14.6% to $1,710 in just the past week after hitting a low of $1,491 on Sept. 7.
ETH/USD 4-hour chart. Source: TradingView
Traders would do well to exercise an extra bit of caution as the Merge approaches, according to Matt Weller, Global Head of Research at FOREX.com and City Index, who suggested that "there is a compelling argument that we could see a 'buy the rumor, sell the fact' reaction in ETH/USD around The Merge."
Weller cited the fact that Ether's price has nearly doubled off its lows from less than three months ago as evidence that the market may have gotten ahead of itself in anticipation of a successful Merge.
The analyst also highlighted the potential risks posed by the proposed ETHpow proof of work version of Ethereum, which currently has a grey market valuation of around 3% of the value of the Ethereum mainnet. "It wouldn't be surprising to see ETH fall by ~3% immediately after even a successful Merge, akin to a stock going ex-dividend," Weller said.
Taking a closer look at the chart for Ether, Weller noted that its "200-day EMA sits just above the August highs around $2,000, and that will be the key resistance level to watch to shift the longer-term trend back in favor of the bulls."
To the downside, support is currently found at $1,400, where Weller expects to see buyers emerge "if we do see a "buy the rumor, sell the fact" reaction to The Merge."
At the time of writing, Ether is trading at a price of $1,710, a decline of 3.73% on the 24-hour chart. The overall cryptocurrency market cap now stands at $1.062 trillion, and Bitcoin's dominance rate is 40.1%.
