The Merge update is a significant event that will certainly increase the volatility of the cryptocurrency market, hence, it should be taken into consideration by any crypto investor. But in addition to Merge, another event might cause tensions soon in the crypto field.
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.
The last two times, inflation data caused a massive spike in volatility on the market. The first time the released number was far above expectations, while July's data brought a pleasant surprise to investors with tamed inflation.
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.
With the Ethereum Merge happening in less than 10 days, almost every industry expert believes in upcoming volatility, liquidity and potential security issues that the Merge may cause. In one of our recent Merge-related articles, we mentioned how the fundamental update might cause 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% price increase in the last 24 hours. The decentralized platform has not yet reported any issues.