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Why Is Ethereum Dropping? – Ethereum Merge Aftermath

Why Is Ethereum Dropping? – Ethereum Merge Aftermath

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As the world plunges into a global recession, cryptocurrencies continue to lose value. Similarly, even the value of stocks decreases. Although most experts expected this recession, many people suffered devastating losses. This creates fear in the market, which leads to people exiting the market and causing prices to fall further. One of the most prominent and promising cryptocurrencies, Ethereum, is one of the victims of panic selling. In just 24 hours, Ethereum lost 10% of its value. This comes after the long-awaited merger took place on September 15. Fortunately, the merger was successful, and Ethereum successfully transitioned from Proof-of-Work (PoW) to Proof-of-Stake (PoS).

This Network Update made Ethereum perfect for daily transactions. In addition, people call Ethereum “ultrasound money” because of its high efficiency. With fast processing speed and ultra-cheap gas fees, Ethereum transactions are as seamless as ever. With the transition from PoW to PoS, Ethereum became one of the greenest cryptocurrency networks. Today, the Ethereum network consumes 99.80% less energy than before the merger. This is likely to attract huge investors who previously held back Ethereum due to the high energy consumption of miners.

Why is Ethereum falling?

But why is Ethereum falling? Why is Ethereum crashing? First, we should note that the droplet has nothing to do with the Ethereum merger. As the entire market has fallen this year, so will Ethereum. The cryptocurrency market is considered a risky market, and like all other crypto products, Ethereum is a risky asset. These assets are among the first to be liquidated by investors in a downturn such as we are experiencing now.

The Federal Reserve (FED) aims to strengthen the US dollar as much as possible. So far they have done a good job, but the cost is heavy for many investors. The more liquidity the FED takes from the market, the less liquidity there is for risk reserves.

As bad as it all sounds, crypto markets are known to recover. As the global economy begins to recover, cryptocurrencies also begin to recover. These things move in cycles. We have ups and downs along the way, but the bikes are always there. We are in a bear cycle, which means we see more downs than ups. After all, even a massive improvement in the biggest DeFi platform can’t disrupt such​​​​​​​​cycles. Now everyone has turned their eyes to the next Bitcoin halving, hoping that it will mark the beginning of another bull market. When the next halving happens, the world economy is expected to start to recover.

Ethereum price today

At the time of writing, Ethereum is trading at just over $1,400. This is about. 9% lower than 24 hours ago when trading at $1500. As we mentioned earlier, the price of Ethereum rose by over 35% in early June when the official Merge date was announced. At that time, the trading price of Ethereum was $990. In the second week of August, Ethereum reached a trading value of $2,000, doubling its price in two months. However, in the past weeks, Ethereum has been steadily losing value, dropping 3-7% several times a week.

Despite the volatility, Ethereum is still the second largest cryptocurrency with a market cap of $175 billion. Its average daily trading volume is $18.5 billion.

Why is ETH falling?

There are many reasons why ETH loses its value. We mentioned most of the reasons above, and we are sure that merging has nothing to do with it. An update that significantly improves the network is unlikely to negatively impact its market performance. However, when the difficulty of Ethereum (Ethereum PoW) happens, some investors may start to transfer their capital from Ethereum to Ethereum PoW. It is not yet clear what will happen to this alleged hard fork.

Frequently Asked Questions (FAQ)

Why have Bitcoin and Ethereum fallen so much?

The cryptocurrency market ended another bull cycle already in 2021. Naturally, a bull cycle is followed by a bear cycle. Given that Ethereum and Bitcoin are the largest cryptos in the market, it is only logical that they would suffer price drops during a bear cycle. Although fear dominates the market, the crypto market remains stable and there are no all-time lows for major cryptocurrencies.

Is Ethereum going up?

Soon enough. We believe that Ethereum has the potential to break all kinds of records. After the successful transition from PoW to PoS, Ethereum is likely to start creating new trends. The team promised a highly efficient network and they delivered. If this continues, large companies and enterprises looking for a way to access Web 3 and the Metaverse will more likely do so through Ethereum. Ethereum is the first cryptocurrency compatible with smart contracts, paving the way for other altcoins.

Is Ethereum 2.0 better?

Yeah. Ethereum 2.0 is better in every way. Some people believe that PoW is better than PoS. However, no statistics support such a claim. The Proof-of-Stake currently used by Ethereum makes the network very fast and solves most of the scalability issues that Ethereum faced before the upgrade. It’s been a day since the move happened; Therefore, we are still not sure if Ethereum 2.0 will be consistent in what it is supposed to offer. In conclusion, we should give Ethereum 2.0 some time on the web before making detailed judgments.

Takeaways

  • Ethereum lost 10% of its value in the first 24 hours after the merger.
  • The merger is a long-awaited event where Ethereum switched to Proof-of-Work (PoW) and proof-of-stake (PoS) mechanism.
  • The merger was announced a long time ago. However, the exact dates were revealed earlier this year, in June.
  • There are many reasons why Ethereum loses its value. Of course, the post-pandemic economy, the conflict in Ukraine and the global recession are the biggest reasons.
  • The price of Ethereum has fallen recently. At the time of writing, Ethereum trades at around $1,400 and has a market capitalization of $175 billion.

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