Ether drop after The Merge, The Ethereum Merge was a success. However, Ethereum’s price continues to decline. So why is this the case?
A smooth transition
At 8:43 a.m. yesterday, Ethereum’s switch from a proof of work consensus method to a proof of stake consensus mechanism was performed. A technique that was successful and a source of relaxation for the project teams.
Therefore, Ethereum continues to pursue its ambitious vision. The company with the second-largest market value cuts its energy footprint and pushes toward greater scalability. This is positive news that has not yet affected investor interest.
Ethereum falls heavily
Ether drop after The Merge, As of this writing, the price of Ethereum has decreased by about 8% during the previous 24 hours. In the last week, this decline amounted to 13.58 percent. The price of ETH is now about $1460, a long cry from the $2000 it touched in early August.
A few days before to the Merge, Ethereum’s price had risen to $1644 due to positive momentum. The latter lasted for a little time. How can this be explained?
A Merge already priced?
Merge Ethereum was, in the eyes of many onlookers, already valued well before its inception. In fact, investors began positioning themselves on the asset at the start of this summer. We’ve seen that Ethereum outpaced Bitcoin significantly in August.
The asset’s price surpassed $2,000, which worked as a formidable roadblock. Therefore, we might assume that short-term investors have completed their purchases. Many likely awaited the sale of the Merge. A typical instance of “buy the rumour and sell the news” as seen on the market. An investor who purchased Ether for $1,000 in June has already made a highly profitable investment.
The analytical platform CryptoRank has revealed an intriguing signal. In the days before the Merge, crypto exchanges witnessed a substantial infusion of Ether. Indeed, it is around 700,000 ETH on September 12 and over 1.7 million ETH on September 14.
Typically, such transfers occur when investors are about to sell their holdings. They deposit their money in order to readily resell them. After receiving confirmation that the Merge was successful, they dispose of their Ethers.
Market conditions are still complicated!
Ethereum has performed very well since the LUNA catastrophe in May and the wider crypto market dump. After hitting a local nadir at $1000, the latter began an amazing ascent. The story around the Merge seems to have been effective, since several investors have purchased.
Despite Ethereum’s impressive success, the asset remains heavily connected with the crypto market. Moreover, the crypto market is impacted by the falls of the big American indexes. For instance, the CPI (Consumer Price Index or gauge of inflation in the United States) was released on Wednesday. These numbers were worse than anticipated, with annual inflation hitting 8.3% as opposed to 8.2%.
In response to this statement, the Dow Jones and Nasdaq plummeted. Once again, the cryptocurrency market followed i. This hazardous asset class continues to be highly connected with the stock market. In addition, it is not surprising that if the Merge is implemented, Ethereum’s value would decline again owing to these complex economic circumstances.
The positive momentum seems to be mostly dependent on this Merge news.
Similarly, it is feasible that Cosmos will follow a similar route. The asset is now one of the healthiest. Its native token, ATOM, has increased from $6 three months ago to $15 today. Some analysts assume that this Layer 0 increase is a result of the planned announcements that will take place on the Cosmoverse next week.
Also, it would not be unexpected for Cosmos to see a major decline when this deadline has past.