Ethereum gains support as merge draws close

Risk sentiment has been low over the past few weeks on rising odds of a steep Fed rate hike in September. Severe rate hikes stifle economic activity, putting pressure on cryptocurrencies. Markets are pricing in a Fed rate hike of at least 50 bp in September, with odds in favor of a 75 bp hike.

Rising prospects of aggressive economic tightening have also renewed recession fears, weakening stock markets. The decline of stock markets has pushed cryptocurrency prices down, as crypto markets have been following stock market trends. 

Risk sentiment dropped even further on Monday, putting pressure on riskier assets, such as cryptocurrencies. A massive energy crisis is threatening Europe, following Russia’s announcement that the Nordstream 1 gas pipeline would be offline indefinitely. 

Bitcoin traded below the key $20,000 level on Monday, falling to $19,700. Further support can be found at the $19,200 level, while resistance may be encountered near $20,500 and further up at $21,800. 

Ethereum price on the other hand rose on Monday, climbing above $1600. If Ethereum's price declines, it may encounter support near $1,550 and further down at $1,420. If the Ethereum price rises, resistance may be encountered near $1,640 and higher up to $1,720.

Ethereum gained support on Monday on Reports that Ethereum main net merge will begin on September 6th. Ethereum Classic, a hard fork of Ethereum, hit an all-time high hash rate on Monday. 

Ethereum price has been boosted in anticipation of the so-called ‘merge’, which will pass through a series of phases in the next couple of weeks and is expected to be finalized on September 19th. The Merge from the Proof-of-Work to the Proof-of-Stake method will be a significant network upgrade that is expected to lead to an increase in demand for Ethereum.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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