Today marks a significant day for the crypto industry as Ethereum’s highly anticipated Shapella Fork is set to go live later today. The update is expected to have a considerable impact on the price of ETH. However, two critical events from the world of traditional finance are also expected to influence the crypto outlook in the short term.
The first event is the release of the Consumer Price Index (CPI) data by the United States Bureau of Labor Statistics in the next few hours. This data is a crucial indicator of changes in the prices of consumer goods and services, as well as inflation trends. If the data indicates growth in inflation, investors tend to seek safe haven in alternative assets like gold and crypto.
CPI data often have a significant impact on the price of leading cryptocurrencies, including Bitcoin. BTC has emerged as an alternative safe haven asset. A significant drop in inflation may lead to a considerable decline in BTC’s price. When the last CPI data was released on March 14, 2023, BTC jumped nearly 5%.
The other traditional finance indicator that may influence the crypto market today is the meeting minutes released by the U.S. Federal Open Market Committee (FOMC). The FOMC’s data will provide insight into the Federal Reserve’s temperature regarding monetary policy and interest rates. A shift in stance policy-wise, such as higher interest rates, will affect the lending capacity of banks leading to a potential decline in BTC’s price.
Meanwhile, Ethereum’s Shanghai Capella Upgrade, dubbed the Shapella Fork, is set to make waves. ETH has already dropped more than 2.5% today ahead of the upgrade. Investors are anticipating a decline in price following the unlocking of $34 billion worth of Ether.
The upgrade is expected to bring about significant improvements to the Ethereum network, including a reduction in transaction fees and an increase in transaction speed. The Shapella Fork is also expected to pave the way for the transition to Ethereum 2.0, which will see the network move from a proof-of-work to a proof-of-stake consensus mechanism.
The crypto market is highly volatile, and the impact of these events on the price of cryptocurrencies cannot be accurately predicted. However, investors are advised to keep a close eye on the market and adjust their portfolios accordingly.