Sep 16, 2022 Toghrul Aliyev
The long-awaited Ethereum merge was a success from a technical standpoint but surprisingly a failure from the pricing one. After one of the most anticipated events in the cryptocurrency space took place, the price of Ether at the time of writing this article plummeted more than 10% from $1,630 to $1,460 according to the data on CoinGecko.
Several reasons explain this price drop. First, many were not thrilled with the switch to Proof-of-Stake (PoS). This is why an Ethereum hard fork, called EthereumPoW (ETHW), was created. It got off to a rocky start, dropping more than 89% from its opening price of $120 to $13. Furthermore, a whole lot of miners have switched to projects like Ethereum Classic (ETC), Ravencoin (RVN), and Ergo (ERG), whose hashrates soared after the Merge.
Second, traders bullish on the Merge “sold the News” while the bearish ones held a record number of short positions, according to the funding rate or cost of holding bullish/bearish (long/short) bets in the Ether perpetual futures. In other words, the compensation paid by shorts to longs to keep their positions was the highest since May 2021.
Third, the market is quite anxious waiting for the next Federal Reserve meeting planned for September 20-21, 2022, where yet another interest rate hike is expected to be announced.
Despite all of the above, the Ethereum team is not stopping with the upgrades. The next one, Shanghai, is planned to roll out after 6 months, allowing users to unlock their staked Ether.