The cryptocurrency market has been stagnant lately, but that is about to change midweek with two significant events – the announcement of the latest CPI data in the United States and the long-awaited Shanghai/Shapella update for the Ethereum network.
CPI Data and its Impact on Bitcoin
For over a year now, the US CPI data has had a strong influence on bitcoin’s short-term price performance. The Consumer Price Index considers various factors and reflects the monthly price changes for US citizens, affecting the Fed’s monetary policy on whether to keep increasing interest rates to combat high inflation. BTC, known for its notorious volatility, is a high-risk asset, and the Fed’s decision to raise interest rates has tended to negatively impact the cryptocurrency’s price. This recurring scenario will happen on Wednesday, with many anticipating that inflation rates have calmed and could be below 6% for March.
Ethereum Shanghai Update Anticipation
The other significant event on Wednesday is the highly-anticipated Ethereum network update, once referred to as Shanghai but altered to Shapella, combining changes in the execution and consensus layers, as well as the Engine API. Some speculated that a significant portion of ETH would be unlocked, made available for investors to sell, resulting in a price drop after years of waiting. However, the funds will be released in phases for network security reasons, which may not allow for immediate sales. Despite that, the update’s importance and the number of unlocked ETH could lead to price volatility.
The Ethereum ecosystem has seen a steady rise in new participants, charting an all-time high ahead of the update.
View metric: pic.twitter.com/2lxw7GTNUl
— glassnode alerts (@glassnodealerts) April 8, 2023