Ethereum Merge — the crypto world’s most-awaited event this year — was officially conducted on September 15. The Merge saw the Ethereum network switch over from a proof-of-work (PoW) mechanism to a proof-of-stake (PoS) model. This switch will bring a 99 percent reduction in energy consumption on the Ethereum network, and will also bring in better scalability and security. Now, it was largely expected that the Ethereum (ETH) token’s price will see a jump after the Merge. However, proving the extremely volatile nature of the crypto market yet again, ETH has been seeing a bloodbath in terms of prices ever since the Merge.
Ethereum price crash: How much did it fall?
Ethereum price, which stood at around $1,700 as of September 12, began to lose steam as the Merge approached closer.
On September 15, when the Merge was officially executed, Ethereum price stood at around $1,620, as per CoinMarketCap data.
ALSO READ: Ethereum Merge Has Officially Taken Place: What Does It Mean?
Over the weekend, Ethereum’s price continued to dip drastically. At the time of writing, Ethereum price stood at $1,302.66, as per CoinMarketCap, marking a 24-hour loss of 10.39 percent as well as a 7-day dip of 25.74 percent.
Ethereum price crash: Why is ETH price falling?
For starters, there’s no fixed indicator that can predict exactly how a cryptocurrency’s price will behave. Just like the stock market, crypto prices fluctuate based on investor sell-offs, macroeconomic factors, and several other elements. So, despite a positive attitude of the overall crypto market toward the Merge, there was no way to predict that Ethereum’s price would indeed increase or decrease.
On September 17, Gary Gensler, the chairperson of the US Securities and Exchange Commission (SEC), warned that the ETH upgrade could lead to the crypto asset being regulated as a security, as reported by the Wall Street Journal. Gensler said at a congressional hearing, “From the coin’s perspective…that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others”. He added that a crypto exchange offering staking services to customers make the operation “look very similar — with some changes of labelling — to lending.”
Gensler’s comments may have led to an increased sell-off from investors, eventually leading to the dipping price of ETH.
As per Indian crypto exchange weTrade’s founder and CEO Prashant Kumar, the Merge was a major event and such an occurrence is “bound to have teething troubles.” Kumar told ABP Live, “There was a certain amount of short-term selling that was also expected.”
Kumar noted that a general decline is seen in all cryptocurrencies and not just Ethereum alone. “The current decline cannot be associated with the Merge alone but global economic factors including inflation hikes in the US are key contributors to this.”
Mudrex CEO and co-founder Edul Patel also agreed that the dip in ETH and the overall crypto market is a result of macroeconomic factors. “Market participants have been moving away from riskier assets due to the soaring inflation, fear of recession, and anxiety around the upcoming [US] Federal Open Market Committee meet-up,” Patel told ABP Live.
Patel added, “At such a juncture, investors should not indulge in any aggressive buying activity but should observe the market movements closely.”
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