Massive volatility spike is what majority of cryptocurrency market expects, but there’s another thing besides Merge that will cause it
The merge update is a significant event that will certainly increase the volatility of the cryptocurrency market, therefore, it should be taken into account by any crypto investor. But apart from the merger, another event could soon cause tension in the crypto space.
US CPI Data
Sept. 13 will be the day when consumer price index data will be released in the public space and help investors understand what is happening with inflation in the country today.
In the past two times, inflation data has led to a huge increase in market volatility. The numbers released for the first time exceeded expectations, while the July data brought a pleasant surprise to investors, with inflation contained.
On Aug. 10, the market saw a spike in trading volume and volatility as Bitcoin reached the local high of $25,000 after it. But despite the short-term euphoria, markets were unable to enter full recovery mode and retraced down shortly after.
Ethereum Merge
With the Ethereum merge taking place in less than 10 days, almost every industry expert believes in the upcoming volatility, liquidity, and potential security issues that the merge might cause. In one of our recent merge-related articles, we mentioned how fundamental updates could lead to a liquidity crisis in the DeFi sector and Layer 2s.
Some users might want to maximize their profits by borrowing ETH from platforms like AAVE or Compound, while others pull their ETH from liquidity contracts, creating a potential liquidity crisis ahead of the snapshot of the network.
At press time, ETH remains relatively calm, with only a 3% increase in price over the past 24 hours. The decentralized platform hasn’t reported any issues yet.
