(Kitco News) - The cryptocurrency ecosystem started Thursday off in a jubilant fashion as the highly anticipated Ethereum (ETH) Merge transpired without a hitch, officially transitioning the Ethereum network to a proof-of-stake consensus mechanism.
Unfortunately for traders in the market, the initial momentum generated by the successful Merge was all but spent by midday, when the realities of the wider economic situation began to once again weigh heavily on crypto prices.
Data from TradingView shows that the market took a turn for the worse near midday, with Bitcoin’s (BTC) price once again plummeting below $20,000 to hit a daily low of $19,514 before dip buyers arrived to offer support.
BTC/USD 4-hour chart. Source: TradingView
In his morning Bitcoin update, Kitco senior market analyst Jim Wyckoff noted that “Bears have gained momentum this week” and highlighted the fact that “Price action is now sideways and choppy and bulls and bears are on a level overall near-term technical playing field.”
While volatility is to be expected, Wyckoff suggested that BTC is likely to range trade between the September low of $18,555 and Tuesday’s high of $22,830 until a clear winner in the momentum battle between bulls and bears is determined.
This outlook was reiterated by market analyst and pseudonymous Twitter user Crypto Tony, who posted the following tweet pointing out that the BTC price is now sitting near the equilibrium (EQ) point between the range high and range low.
$BTC / $USD - Update
— Crypto Tony (@CryptoTony__) September 15, 2022
We are currently balanced on the EQ, which is acting as interim support, but lower is the game. Lose that level and short down to the range low at $18,500 and $17,600 pic.twitter.com/PiM1ykeUeI
Ethereum hits a 3-week low
Concerns that the Merge could turn into a “buy the rumor, sell the news” type of event were partially validated by Ether’s price action following the transition, as it fell to a three-week low of $1,462 before bouncing back above support at $1,500.
ETH/USD 4-hour chart. Source: TradingView
Aside from some likely profit taking by traders who were banking on a price rise as the Merge approached, the general market weakness is likely to have more to do with factors external to the crypto market, such as the Fed, as highlighted in the following tweet from independent market analyst Michaël van de Poppe:
Seems clear to me; waiting until next FED meeting and probably until then markets will be down, pricing in the worst and 100bps.
— Michaël van de Poppe (@CryptoMichNL) September 15, 2022
Evidence that the market may be starting to price in the possibility of a 100bps rate hike can be found in the performance of the wider crypto market, which was mostly red in trading on Thursday alongside declines in the S&P 500, DOW and NASDAQ.
Daily cryptocurrency market performance. Source: Coin360
The overall cryptocurrency market cap now stands at $969 billion, and Bitcoin’s dominance rate is 39.2%.
