Crypto Market Musings

Relief rallies happen when a lack of bad news — or news that wasn’t quite as bad as investors expected — causes the markets to go up. And they typically take place during bear markets. 

We usually don’t associate relief rallies with crypto. But I suspect that’s what we’re seeing right now. Bitcoin is trading above $23,000 as of this writing and is up 11.45% in the last seven days. Ethereum is up 29.29% during that same time period and trading above $1,570. And there was no big crypto “event” to spark the rally.

I’ve written extensively about how the crypto markets and the stock markets (particularly the tech sector) are closely correlated right now. Investors were so happy to hear less than terrible earnings reports that they started buying again. That drove stock prices up. And because the health of the crypto markets is closely tied to stocks right now, crypto prices went up too.

The next round of bad market news (and there will be a next round) will trigger another sell-off. The Fed will announce another major interest rate hike next week. Let’s see how the markets handle that before thinking we’re out of the woods. I believe the bear market will be around for some time. So make sure you stay disciplined. The bumpy ride isn’t over yet.

What I'm Thinking About

The long-awaited Ethereum merge is scheduled for September 19. The key word is scheduled. It’s been delayed many times. The merge is when Ethereum shifts from a proof of work protocol to a proof of stake protocol. The change will (hopefully) make Ethereum much more scalable and efficient.

Just as bitcoin halvings fuel price surges, I believe the merge will drive ethereum prices up as well. This is a massive event that crypto investors have been waiting for. And ethereum will likely outperform the broader crypto markets for the next few months.

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