Over the weekend, the quotes of the leading cryptocurrencies broke away from the two-to-three-month lows they were at in early September and returned to mid-August values.
Part of the rise in prices was on the back of a recovery in the US stock market; the interest of large investors in Bitcoin; and the imminent introduction of a new cost-effective mining algorithm for Ethereum. The prospects for the virtual currency market are still uncertain, especially against the background of the expected aggressive rate hike by global financial regulators.
As TopForex.trade experts note, the dollar strengthened in the first half of the week, hitting new year-to-date highs against a basket of currencies. The dollar index was at a level of 110.78 points. Then on September 6, the euro/dollar slipped to a low of 0.9863 since the beginning of the year. Against the backdrop of the strengthening of the dollar and the decline in stock indices, the BTC/USDT pair fell to $18.5 thousand; the dollar index reached new highs of 108.36 points.
Also on Thursday, the ECB raised the rate by 75 basis points to 1.25% per annum. It was Powell and the ECB decision that pushed the dollar, the S&P500 index, and cryptocurrencies to corrections. As a result of Friday, September 9, the S & P500 index rose by 1.53%, the Nasdaq by 2.11%.
The next Fed meeting will be held at the end of September, and Powell will no longer speak before it, so traders and investors are waiting for the publication of the US consumer price index for August, which will be released on September 13th.
Since the beginning of the last week, the BTC/USDT pair has risen by 7.53%, rising to $21.5 thousand. If we count from the weekly low of $18.5 thousand, then Bitcoin has risen in price by 15%. Buyers first successfully passed the resistance of $19.5 thousand, then within a few hours, the price moved to the resistance of $20.5 thousand, which the buyers could not pass in the week from August 29 to September 4. In the next step, market participants pushed the price to $21.6 thousand.
Bitcoin posted gains over the weekend and approached $22,000 in Monday morning trading in Asia.
For buyers, a new resistance zone is $21.9–22.5 thousand. As long as the price is trading below $22.5 thousand, the market remains under the control of sellers.
In addition, the reason for the positive momentum in the cryptocurrency market was the emergence of strong buyers of Bitcoin. Market participants could react to the news about the readiness of the largest institutional investor in Bitcoin, MicroStrategy, to purchase BTC for up to $500 million more.
The increase in volumes in the cryptocurrency market was also affected by the rally of Ethereum before the global update. US regulators clearly prioritize this mechanism based on its much lower power consumption compared to proof-of-work (PoW). In addition to improving energy efficiency and the speed of settlements, the new protocol increases the degree of decentralization. If Bitcoin had no dependence on the American stock market, then its prices would definitely not be in the $20,000 range but much higher.
Expectations for the main cryptocurrencies are multidirectional
In the last 10 weeks, Bitcoin continued to weaken relative to the rest of the crypto market. For the first time in the last 4 years, its share of the total capitalization fell below 40%, which last happened against the backdrop of the final stage of the bull market, but now the reason for the weakening could be the growing popularity of Ethereum , while the bearish trend is in full swing.
In addition, the next stage of updating the Ethereum ecosystem is scheduled for the middle of the coming week — the main network is expected to merge with a test branch in order to switch to a new PoS consensus mechanism. This event may cause increased interest, and as a result, an increase in demand for the token.
In this regard, one should not expect a significant increase in Bitcoin. It is possible to resume falling to the lower border of the previously determined values of $19–21 thousand, but with a potential breakout in case of a sharp increase on the eve of the local trend reversal.
Ethereum, in turn, can move into an active stage of growth. Directly in the process of merging the two networks, high volatility can be observed with price jerks both in one direction and in the other, but with successful completion, rapid growth is quite possible against the backdrop of one of the most significant events in the crypto sphere over the past few years.
