The much awaited Ethereum Merge has come and gone. The aftermath of this event is still rather uncertain. However, it seems that the “Successful Merge” has produced some sort of reaction from the crypto society. It is not the reaction many were expecting. Ethereum is down by nearly 8% after the merge.
The second largest cryptocurrency in the world is now trading at $1,500 for the first time in more than a week. The plunge came from the merge, shifting from a more energy-intensive model to a more eco-friendly one.
What Exactly Is causing This Drop In Ethereum Prices?
The Ethereum merge went off without a hitch from a tech perspective. However, sentiment around ETH after the shift to a more environmentally-friendly consensus model might be dipping. Today, the price of ETH plummeted below the $1,500 mark for the first time in more than a week.
According to data from CoinGecko, ETH is down almost 8% over the last 24 hours to a current price of $1,485. That’s a sharper drop than the rest of the crypto market right now. According to CoinGecko it is down about 3% on the whole, with Bitcoin down about 2%.
Initially, the price of ETH had remained largely flat after the overnight merge, hovering around the $1,600 mark with slight fluctuations. However, shortly after 10AM ET this morning, the price sharply dipped from about $1,585 to its current mark. The move is not altogether unexpected.
In a report in early August, crypto analytics firm Glassnode flagged data on derivatives exchanges. One that indicated that the merge was shaping out to be a “sell the news” event.
The hype around the merge appeared to be generating bullish sentiment around Ethereum in July. However, sophisticated derivatives traders were already hedging their bets. They did this expecting the price of ETH to drop after the event, according to Glassnode.
Ethereum’s Sell-The-News In play
“Traders appear to be utilizing call options to bet on the ETH price into September, whilst futures and options backwardation indicate an expectation to sell-the-news is in play,” Glassnode researchers wrote in a report at the time.
The merge is Ethereum developers’ name for the long-awaited shift away from the original proof-of-work consensus model. A model in which thousands upon of users run powerful computers to secure the network and also earn cryptocurrency rewards.
Under the new proof-of-stake model—in which validators stake (or hold) coins in the network to process transactions—the network is estimated to use over 99% less energy than before, according to the Ethereum Foundation.
While many Ethereum proponents were in favor of the merge, some ecosystem participants were less thrilled. For example, some have forked the previous version of the network to create the new EthereumPoW (ETHW) network. This will retain mining, while other miners have instead started mining coins like Ethereum Classic (ETC) or Ravencoin (RVN).
The Current Price Of Cryptocurrencies Today
Meanwhile, on the general cryptocurrency scene, bitcoin and other cryptocurrencies are strugging.
“The current pressure on the crypto market is a result of a broader sell-off in the traditional markets. Especially as investors move away from high-risk assets to safeguard their wealth from economic shocks. The soaring cost of food and energy along with geo-political uncertainty will keep the investors on their toes in the coming weeks.” said Tarusha Mittal, COO and co-founder of UniFarm.
Bitcoin could not recover on the day as it continued to trade below the $20,500 markThis is a crucial point for the world’s largest cryptocurrency. Bitcoin price today was standing at $20,172.85, down by 0.37 per cent in the last 24 hours, according to data from CoinMarketCap.