Crypto news: Will cryptocurrencies rebound in face off Ethereum Merge?

Cryptocurrencies have been consolidating for the past few days, and there was little volatility in the market over the weekend. Friday's attempt to attack demand after the NFP report cooled off after Gazprom halted gas deliveries via NordStream for an indefinite period, which definitely worsened stock market sentiment. Will cryptocurrencies have enough strength to negate further declines?

• Bitcoin's price is consolidating in a range of $19,500 to $19,900. Ethereum is still trading around $1560 where demand and supply are fighting a battle to further Ether's valuation;
• Block reported that the world's largest asset management fund, BlackRock, has partnered with the Kraken exchange. The Wall Street giant has chosen the CF Benchmarks index to price Bitcoin; the fund is owned by a subsidiary of cryptocurrency exchange Kraken (Crypto Facilities).  BlackRock has been expanding its influence in the cryptocurrency sector since 2022, and in August the company signed an agreement with Coinbase and established a private one, buying BTC from exchanges on behalf of US institutional investors;
• The year's most important event in the crypto sector, i.e. the Ethereum Merge, is only about 8 days away. The market is in a slump, and the ETH hard fork is starting to be seen as a risky event for the Ethereum blockchain due to possible hacking attacks. Therefore, we can assume that the price to 'The Merge' may remain dormant or score a small increase unless the crypto market encounters another wave of sell-offs. If the developers rise to the occasion, Ethereum may rebound from the disastrous sentiment after the aborted rally and increase its competitive advantage from other altcoins among the group of so-called 'Ethereum Killers';
• In case of technical problems on the day of The Merge, the target altcoins from the aforementioned group (Cardano, Solana, Bitgert, Avalanche, etc.) may become the beneficiaries of ETH's decline in popularity in the long term. Ethereum Classic, which will still maintain the Proof of Work consensus method, may also see an increase in popularity;
• Developers at Input Output have announced the date of the most important hard fork in the history of the Cardano network, which is already scheduled for September 22. The Vasil hard fork is expected to make the blockchain better scalable and reduce transaction fees on the network, as well as prepare the Cardano network to process up to 1 million transactions per second. The Input Output Global (Cardano) team is currently funding a nearly $4.5 million research center for blockchain technology

The chart illustrates well the record capital outflow from the cryptocurrency market that has taken place over the past few months. Risk sentiment remains low, with investors preferring a defensive strategy. The July-August price rally was used by cryptocurrency investors to distribute (sell) assets at higher prices, many times at a loss or close to the cost of acquisition, illustrating little faith in a price rebound. The relative sum of investors' losses over the past weeks amounted to 0.28% of Bitcoin's total capitalization per day. Until there is an event on the horizon that could definitely improve sentiment around 'risky assets' cryptocurrencies will continue to be dragged down by resignation, and further potential rallies could again be used to exit the market at higher prices. Source: Glassnode

The aSOPR indicator, helps determine the average loss or gain on BTC tokens sold. When aSOPR rises above 1.0 (the black straight line) usually Bitcoin returns to the favor of investors. As of January 20222, Bitcoin's distribution causes the support of 1.0 to be rejected. Looking from the psychological side, there is currently a belief in the market that can be described with 'Give me my money back', which creates selling pressure. At a time of higher interest rates and a global economic slowdown, as well as energy problems, investors are leaving the cryptocurrency market to spend their accumulated capital on more important things. The recent sell-off confirmed that the bottom may be below after a retest of the 1.0 level near $24,000 ended in a sell-off. The upside was used to sell by much of the market. Jerome Powell in Jackson Hole confirmed that the Fed will focus on achieving its inflation target by which the 'Fed pivot' played by the markets collided with the wall causing another bullish retreat in the stock market, with which cryptocurrencies correlate. Source: Glassnode

Bitcoin's long-term holders are under supply pressure. The Spent Output Profit Ratio (SOPR) chart shows the weekly average for long-term holders (LTH). The average is in the range of 0.6 to 0.65, which means that investors who do not sell their Bitcoin for at least 5 months (usually characterized by a higher level of conviction) accept losses ranging from -35% to even -40%. In 2018, the losses accepted by LTH addresses fluctuated even around 50%. Source: Glassnode

The sentiment chart of the 'Fear&Greed Index' has been indicating a phase of extreme fear for nearly a week now, however, the pointer does not fall below 20 and is still nearly 50% above the levels of the June panic. Source: alternative.meBitcoin chart, W1 interval. Looking at the broader interval of Bitcoin quotes, we see that the current weakness is unprecedented. Bitcoin is clearly struggling to climb above $20,000 and the moving average on the weekly interval, which runs around $22,000. In previous cycles, the price did not stay in the oversold zone for long, demand was definitely quicker to return to the market. Source: xStation5

Ethereum chart, D1 interval. The token remains below 23.6 Fibonacci support and below the 200-session average, which still runs above $2100. The price has been moving in a sideways trend for nearly a week, which indicates that another major move is imminent. The Merge hard fork still can be the Ethereum catalyst. Source: xStation5