Ethereum has undergone a major network upgrade called consolidation, which supporters say will make transactions much more energy efficient. Following the merger, ether prices plummeted after a massive spike before the event.
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Ether The Ethereum network, the underlying technology of the cryptocurrency, has dropped more than bitcoin since it went through a major upgrade called consolidation.
Ethereum is a blockchain technology this effectively allows developers to build apps on top of it. Ether is the native cryptocurrency running on Ethereum.
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Merge is an Ethereum upgrade that changes the verification mechanism for transactions. Proof-of-stake with Proof-of-work method. Proponents say this will make verification processes on Ethereum much more energy efficient and is eagerly awaited by the crypto community.
Despite the successful upgrade, the ether fell further. bitcoin.
since September. 15, the date the merge was completed, at around 4:30 pm ET on Tuesday, ether dropped about 15%. Bitcoin fell about 3% over the same period.
Before network upgrade, ether price roughly doubled from yearly low in JuneIt far outstripped bitcoin’s gains.
Vijay Ayyar, vice president of institutional development and international at crypto exchange Luno, said that the merger is already “priced” for ether and that “the real thing is a “sell the news” situation.
According to Ayyar, traders are also shifting their investments from ether and other alternative digital currencies to bitcoin, as “the expectation is that bitcoin will outperform a few months from now.”
Investors are also wondering if the regulatory status of ether will change after the merger, after US Securities and Exchange Commission Chairman Gary Gensler last week stated that cryptocurrencies operating on the Proof-of-Stake model applicable to Ethereum could be classified as one. security. This will put it under the control of regulators.
Gensler, whose comments were reported by several news sources, not specifically named ether. The proof-of-stake model involves investors “staking” or locking in their ether and earning returns for it.
“There is another concern for Ethereum: PoS (proof of stake) crypto may come under SEC scrutiny,” said Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank.
Rate hikes still in focus
Crypto investors are also a Fed rate hike expected this week.
Central banks around the world are raising interest rates to deal with rampant inflation. But that hurt risk assets like stocks. Cryptocurrencies are closely associated with US stock markets, especially tech-heavy ones. Nasdaq. Crypto also felt the heat as stocks came under pressure.
Inflation in the US came in higher than expected in August, hitting stocks and crypto.
“From a macro perspective, inflation came in higher and therefore led to sales across all markets, but ethereum and altcoins sold harder considering they are in the riskier part of the crypto spectrum,” Ayyar said. Said. .
According to Ayyar, Bitcoin has been trading at around $18,000 to $25,000 since June, at a level that investors bought into.
But “any change in the macro environment in terms of inflation of interest rate surprises is certainly of concern,” he said, adding that if bitcoin drops below $18,000, the cryptocurrency could test as low as $14,000.
