Ether hits seven-week low: Here’s why

Market


Crypto investors’ focus shifted back to the larger selloff in risky assets, causing Ether to fall to a seven-week low and a bonus token given to holders of the digital asset to plunge by more than 50%. The native money of the Ethereum blockchain, ether, fell for a sixth session in a row, falling as high as 6.5% to $1,407. The Merge, a network transfer to a more energy-efficient way of managing transactions, held investors’ attention for weeks.

“It’s likely due to a worsening macro backdrop that is causing a decline in value of all risk assets in general, traditional equities included. Also, there was a widespread view among traders that the Merge was a sell the news event despite the upgrade’s long-term positive impacts,” Christine Kim, a research associate at Galaxy Digital, tweeted.

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“The price activity of ETH following the Merge should not be taken as an indication of the upgrade’s relative success or failure. The Merge from a technological perspective was a resounding success,” she added.

As of 2:58 PM in New York, Bitcoin was down around 1.5% to $19,548. Compared to Ether’s 19% decline, the largest cryptocurrency by market value has fallen by about 9.8% this week.

Also Read: Bitcoin prices may go even lower after today – here is why

The offshoot, known as EthereumPOW, represents a large portion of the blockchain’s legacy computing activities that declined to take part in the software upgrade. Ethereum switched its network security protocol from a so-called proof-of-work system to a proof-of-stake one. Since late on September 15, the additional cryptocurrency token that investors acquired following the Merge has fallen up to 60%.

According to data from CoinMarketCap.com, the new cryptocurrency was listed at a price as high as $33 in the last 24 hours and on exchanges like FTX before Ether holders received the token. Late on September 16, it was trading at around $9.27.

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“With the Merge ending up mostly a non-event and overarching macro headwinds still at play, traders unwound their ETH positions and rotated back into Bitcoin,” said Jason Lau, the San Francisco-based chief operating officer of the Okcoin exchange.

“Now that the Merge has (very successfully) concluded, we’ve run out of near-term positive catalysts and we’re running into a wall of bearish macro sentiment,” said Henry Elder, head of decentralized finance at Wave FInancial.

(With agency inputs)

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