Cryptocurrencies are mostly in the red today, hampered by the prospect of global monetary tightening and cooling in the hype of the Ethereum Merge upgrade and Terra tokens over their tax burn plan. The global crypto market cap today has fallen below the $1 trillion mark, a decline of over 4% in the last 24 hours at $974 billion.

Meanwhile, the total volume in DeFi currently stands at $3.77 billion, which is 8% % of the total crypto market 24-hour volume. Also, the volume of all stablecoins is now at $42.91 billion, which is 91.02% of the total crypto market 24-hour volume.

For now, most cryptos seem likely to continue their vulnerability to the same macroeconomic forces that have been affecting stocks and other riskier assets for months.

What you need to know

Last week, Bitcoin and other cryptos began sinking after a disappointing Consumer Price Index (CPI) indicated that the U.S. central bank was far away from taming inflation. Again, investors will be closely eyeing the Federal Open Market Committee’s (FOMC) decision on a fresh interest rate hike this week, although a minimum 75 basis point increase is widely expected – a continuation of the Fed’s monetary hawkishness.

The World Bank also recently noted that central banks’ interest rate increases could push the global economy into recession in 2023. As a result, the S&P 500 and the Nasdaq Composite index suffered their worst weekly performance since June.

Goldman Sachs has cautioned that aggressive rate hikes could trigger a 26% fall in the S&P 500. If the correlation between the equity markets and cryptocurrencies continues, it could bring more pain to the markets, especially in the face of a recession.

Bitcoin, the world’s largest cryptocurrency, was trading more than 7% lower at $18,430, dropping far below the $19,000 mark.  It gave up a lot of its gains after the CPI data came out higher than expected and the ETH Merge appeared to be a sell-the-news event.

Its total market cap is now back below $375 billion, a threshold last breached on Sept. 6 and not since July 13 before that. BTC’s trading volume now stands at around $31.6 billion.

Our take

A lot is hinging on the next move announced by the U.S. Federal Reserve. While Bitcoin’s price can withstand a 0.75 basis point increase in interest rates, a full 1 basis point will like tank BTC and the rest of the market with it

The S&P 500 is on track to fall more than 9% this week, according to analysts. This doesn’t bode well for bitcoin which has shown a close correlation with the index.

On the technical side, BTC failed to surpass the $20,500 resistance level and started a fresh decline which has seen it trading below $19,000. Its fall below $18,550 this morning is likely to open doors for a move towards the $18,000 level.

Ether (ETH) has plunged over 10% to over a two-month low at $1,370. The Ether price jump since mid-June that was spurred by hype around the merge is rapidly unwinding. Meanwhile, investors are bracing for volatility from the jumbo interest-rate hike expected this week from the Federal Reserve to fight price pressures.

The merge is just the start of a series of upgrades that are to come on Ethereum to make it more scalable and decentralized. Many challenges still await the second-largest cryptocurrency including a potential regulatory backlash. The SEC chair has suggested that POS blockchains could be recognized as securities, a move that could affect Ethereum in its new form.

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What you should know 

In stark contrast to the Merge's mostly flawless execution of the Ethereum Merge, technical snafus and defections marred the new “fork” blockchain by crypto miners aiming to preserve the old proof-of-work network.

Ethereum has a broad spectrum of trading pairs with BUSD leading the pack capturing 35.10% of today’s ETH swaps. Tether (USDT) commands 33.34% of Sunday’s ethereum trades, and USD captures 9.78%. The greenback is followed by BTC swaps representing 4.45% of ETH pairs, JPY commands 2.33%, and the stablecoin USDC captures 2.23% of ETH’s trade volume. Binance and FTX are ETH’s most active trading platforms on September 18.

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Dogecoin was trading about 7% lower today at $0.05 while Shiba Inu tumbled more than 9% to $0.000011. Other crypto prices' performance also declined as XRP, Uniswap, Solana, Polygon, Avalanche, Binance USD, Polkadot, Litecoin, Apecoin, Cardano, Stellar, Chainlink, Tron, Tether prices were trading in the red over the last 24 hours.

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Elsewhere, reports that Ripple Labs Inc. and the US Securities & Exchange Commission (SEC) are seeking an immediate ruling in a court case over Ripple’s affiliated token XRP saw the latter shed as much as 12%. The SEC argues Ripple was reckless in its claims that XRP is not a regulated security.