It was a significant change.
The merger was observed as a vacation to the cryptosphere, both online and physically, with watch parties that featured speeches, music, and even special guests.
The price of the second-largest cryptocurrency by market value fell around 8% after last week’s historic Ethereum network technology upgrade known as “The Merge”, as investors favor its potential long-term benefits versus its short-term price effect.
According to information from CoinGecko, the price of Ethereum is now hovering around $1350.
Data from Coinmarketcap shows that Ethereum’s market value has dropped significantly to just over $160 billion, with daily volumes flat at around $17.5 billion.
Investors will soon focus on Ethereum’s “Shanghai” upgrade, which will arrive next year and allow users to withdraw staked ETH.
Meanwhile, Coinglass records show that since September 15, Ethereum has liquidated $759.11 million.
Traders who were bullish on cryptocurrencies and maintained long positions accounted for nearly $497 million, or nearly 70% of those liquidations.
Why are liquidations high?
Chief Executive and Founder of KoinBasket, Khaleelulla Baig, says the US government’s indication that Ethereum will be treated as a security rather than a commodity, which will lead to tighter regulations and tax repercussions, is the main factor in Ethereum’s decline following the merger.
The tests and experiences of traditional Web2 institutional investors in the cryptocurrency market are also putting some downward pressure on Ethereum.
However, he adds, “the day these deep-pocketed investors become strong supporters of the borderless and decentralized monetary world of Web3, we could see strong cryptocurrencies react favorably to rising interest rates. and increasing budget deficits”.
Neeraj Khandelwal, co-founder of cryptocurrency exchange CoinDCX, claims that after the merger, there were significant Ethereum selloffs that drove the price down.
This, according to Khandelwal, is the result of the unwinding of some speculative holdings and selling pressure from former Ethereum miners who have accumulated large investments in ETH.
“This was further compounded by a weak macroeconomic environment and bearish sentiment across all markets due to the Fed’s continued interest rate hikes. Overall, however, we are very optimistic about the impact of the Ethereum merger and future milestones to bring efficiency and scalability to the DeFi world,” he said.
Not a big fan of ETH Merge?
According to Michael Young, Product Operations Manager-AscendEX Earn, one of the causes of the cascading selloffs was the common misconception that markets trade more on information than events. The merger has been common knowledge for some time.
The spot price of ETH over the past few months has represented what the market would value ETH PoS (rather than PoW) given the current economic backdrop, he continues, and so the actual course of the event does not constitute an adequate basis to convert the attitude towards ETH from pessimistic to positive.
What the future holds for ETH
People liquidating today are likely doing so because of external economic concerns such as inflation and rising interest rates, according to Mech COO and co-founder Kyle Klemmer.
“Eth prices and crypto prices as a whole will continue to decline. None of this is a byproduct of fusion.”
According to Garry Krugljakow, founder of the GOGO protocol, the merger was a success, but ETH has yet to show it can break away from Bitcoin’s declining value, let alone create the momentum for a self -called reversal.
“And with the rate hikes expected by the Fed, it’s no shock that longs have taken the biggest hit. caution should be on everyone’s mind right now,” says Krugljakow.
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