Ethereum fell to two-month lows after plummeting 10% to $1,300 over the past 24 hours.
For all the anticipatory momentum, market speculation, and meme frenzies, Ethereum’s historical transition from Proof-of-Work to Proof-of-Stake, known somewhat ominously as The Merge, was by most regards dramatically uneventful.
Hash rates sustained around 870K GH/s marking stability in the computational power of the network. Additionally, the percentage of full blocks showed positive signs of performance with a decrease from approximately 20% to 10%. Even the notorious gas fees behaved nicely, holding steady at very modest 23.10 gwei.
Beyond all the blockchain jargon and quantitative metrics, the Merge was seamless to the extent that the majority of ecosystem participants didn’t need to lift a finger — they just simply watched and admired.
And yet, despite the positive sentiment, Ethereum’s native cryptocurrency, Ether (ETH) — also the second highest asset by market capitalization — has experienced a 20% demise in value since its pre-Merge highs on September 15, currently changing hands for just $1,300.
Equally, heavy liquidations to the tune of $159.69M over the last 24 hours have compounded declines.
The Ethereum merge was arguably — depending on which maximalist you speak to — of greater significance to its network than the Bitcoin halving event in 2020.
Although entirely different mechanisms, ETH was expected to follow a similarly bullish trajectory as BTC did, in the former’s case back into the $2,000 territory.
So, why the post-merge blues?
Why is ETH down?
Despite preaching a meritorious philosophy of independence and self-autonomy, the cryptocurrency market still remains firmly tethered to the global macroeconomic climate, and has been suffering the consequences of its tumultuous misfortune over the past few months.
The stimulus-driven post-pandemic surge was regarded as an historic phase of positive correlation between stocks and cryptocurrencies, where both traditional and digital assets rallied alongside one another to reach new all-time-highs.
This week, the U.S. Bureau of Labor Statistics published the monthly Consumer Price Index (CPI) results above forecasted predictions at 8.3%. This sparked an immediate selloff on September 13 for both Bitcoin and Ethereum, down 11.9% and 12.8% respectively in the hours succeeding.
Following the CPI release, U.S. President Joe Biden gave an oddly rousing speech outside the White House which local media reported as an ‘inflation celebration’ after Biden remarked it as a ‘great day’.
Perhaps President Biden was referring to the positive successes of the Inflation Reduction Act since its introduction last month, in addition to the halted rise of inflation from July’s 31-year highs of 9.1%, but the choice of wording was a tad baffling.
In this case, increased inflation numbers were seen as a negative foreshadowing for digital asset prices, and vice versa.
Popular investment advisor MacroAlf analysed that a “12-16 months relatively severe recession should bring inflation down all the way to 2%.”
On the other hand, Bankless co-founder Ryan Sean Adams tweeted his bullish sentiment at the inflation prices, suggesting that crypto could provide a financial hedge investment.
However, it’s worth noting as of today, broad-scale macroeconomic movements in the global markets generally precede price action in crypto. An additional rate hike from the Federal Reserve on September 21st would most likely spell bad news for risk-on asset classes like cryptocurrencies and growth stocks.
Were there any winners this week?
Of the leading 100 cryptocurrencies, only Helium (HNT) and Algorand (ALGO) have delivered growth numbers over the past 24 hours, at 3.69% and 1.81% respectively, and only the sporting asset Chiliz (CHZ) up across the week at 12.95%.
The Scotty Beam token was also up 40% overnight according to CoinGecko, made popular from the phrase, “Beam me up Scotty”, associated with the 1960s iconic series Star Trek signaling for lieutenant commander Montgomery Scott to initiate a form of teleportation to return the team to their ship. Fun fact: it also refers to the slang term for ‘give me some drugs’ or ‘to inhale cocaine.’
The total cryptocurrency market capitalization slipped briefly below $900 billion before upholding and rallying slightly higher towards $910B, according to data from TradingView.