Bitcoin topped $22,000 as it continues a week-long rally ahead of U.S. inflation data and a highly anticipated Ethereum network upgrade.

The world’s largest cryptocurrency hit $22,341.50 at 9:45 p.m. ET Sunday before dipping slightly, according to CoinDesk data. Bitcoin was trading at $22,203 at around 4:03 a.m. ET on Monday.

After falling below $19,000 on Wednesday to its lowest level since June, bitcoin has since rallied around 17%.

This also comes off the back of a winning week last week for U.S. stocks. Bitcoin has been closely correlated to equity markets, particularly the Nasdaq, and often moves higher when the tech-heavy index rises.

Crypto investors are looking ahead to the August consumer price index report, scheduled to be released Tuesday, to see the direction inflation is headed which could give hints toward future policy moves by the U.S. Federal Reserve.

Stocks have been under pressure this year as the Fed has hiked interest rates to try to control rampant inflation.

Cryptocurrencies, which are also risk assets, have been battered. Nearly $2 trillion has been wiped off the entire crypto market since its all-time high in November. Bitcoin is down more than 50% this year.

That decline has also been driven by crypto-specific issues including the collapse of key projects and bankruptcies that have spread across the industry.

Meanwhile, the Ethereum network will complete a long-awaited upgrade called the merge. This will transform the Ethereum blockchain from a proof-of-work to proof-of-stake model and significantly reduce the amount of energy required for the network to operate.

Proponents say this could pave the way for a broader use of ether, the token that runs on Ethereum.

“Crypto faces an unusual double whammy this week: U.S. inflation data and [hopefully] the long-awaited and oft-delayed Ethereum Merge. Hold your breath for a rollercoaster ride,” Antoni Trenchev, co-founder of Nexo, said in a note on Monday.

“In a time awash with narratives, there’s none bigger than the Merge in crypto and it’s one which the wider world should take notice of with Ethereum’s carbon footprint set to be slashed by 99%.”

However, analysts cautioned that the merge will not necessarily speed up the Ethereum network, which is known to be slow, nor will it reduce the fees associated with transactions.

Still, excitement has been growing for the merge. Since ether hit its low for the year in mid-June, the price for the world’s second-largest cryptocurrency has far outpaced bitcoin’s. Ether is up more than 90% since June. 19 while bitcoin has risen just over 20%, begging the question of how much the merge has already been priced in.

The Federal Reserve is also widely expected to increase interest rates again next week when its Federal Open Market Committee (FOMC) meets, which is another dark cloud hanging over the crypto market.

“The Merge may trigger a ‘sell the fact’ situation in the crypto market and we still need to be careful for next week’s FOMC meeting. Bitcoin could continue to rally but it could be quite short lived,” Yuya Hasegawa, crypto market analyst at Japanese exchange Bitbank, said in a note Monday.

That decline has also been driven by crypto-specific issues including the collapse of key projects and bankruptcies that have spread across the industry.

Source: CNBC