Bitcoin climbs as inflation update nears, ether loses steam ahead of its Merge

Sep. 12, 2022 5:40 PM ETBitcoin USD (BTC-USD), ETH-USDRIOT, BTCM, SOS, COIN, BTBT, BRPHF, SI, GREEBy: Max Gottlich, SA News Editor4 Comments

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Bitcoin (BTC-USD) has outshined ethereum (ETH-USD) in late Monday afternoon trading as investors weigh the latter's highly-anticipated Merge this week to Proof-of-Stake from Proof-of-Work.

With all three major U.S. stock indices ending the session in the green, bitcoin (BTC-USD) climbed 3.8% to $22.33K at 5:40 p.m. ET, as investors' risk appetite expands on the eve of key inflation data. Ether (ETH-USD), though, slipped 1.2% to $1.71K, but still up nearly 14% in the past week vs. BTC's 19% upswing.

Ether's so-called Merge is expected to lead to a significant reduction (99%) in the network's energy consumption, thus alleviating environmental concerns raised by regulators and wary institutional investors. But there are risks involved "that could make the event messy in the short term," warned GlobalBlock analyst Marcus Sotiriou.

For instance, "many people in the ecosystem may not be ready to process the new chain, as they have not updated their software," and "some of the APIs could break in ways which many people cannot predict," he explained.

Cowen analyst Stephen Glagola explored a number of risks surrounding the long-awaited Merge, including "1) nodes failing to upgrade for the Merge, 2) technical issues/bugs could present themselves and result in software client failures, and 3) there could be unanticipated issues/breakdowns in the ecosystem," he wrote in a note to clients.

Another potential cause behind Ether's (ETH-USD) slump was that institutional investors pulled out $62M in ETH-related products in the week ended September 9, making up almost all of crypto investments' outflows of $63M at the time, according to a report by CoinShares.

"This comes despite the improved certainty of the Merge and perhaps highlights a concern amongst investors that the event might not go as planned," CoinShares wrote.

For crypto-focused stocks, Galaxy Digital (OTCPK:BRPHF) +8.3%, BIT Mining (BTCM) +5.2%, Riot Blockchain (RIOT) +2.5%, Coinbase Global (COIN) +2.1% and Silvergate Capital (SI) +2.3% were among some of the biggest intraday winners. Greenidge Generation (GREE) -2.5%, Bit Digital (BTBT) -1.9% and SOS (SOS) -1.3%, though, drifted down.

In crypto-specific news, The Wall Street Journal reported that Fidelity considers enabling bitcoin trading for its over 34M brokerage clients.

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