After a much awaited and successful software upgrade, the Merge, Ethereum (ETH) registered its biggest fall in a month on Friday, breaching $1,500 in a knee-jerk reaction after the network overhaul.
The second-largest crypto asset, which has shifted its mechanism to proof-of-stake (PoS) from proof-of-work (Pow), in a one-of-a-kind upgrade, had topped $2,000 due to the Merge euphoria but took a sudden beating.
Ethereum tumbled roughly 12 per cent from the $1,645 mark to test $1,450 levels on Friday before trading around $1,475 at 13.20 hours IST, the data from coinmarketcap suggested.
Ethereum’s total m-cap plunged to $180.25 billion, and its volumes sank 14 per cent as tokens worth $20.8 billion exchanged hands in the last 24 hours, suggests data.
However, Ethereum was not the sole crypto token in troubled waters, but among the top-20 crypto tokens, it was the biggest loser. Other tokens, including Bitcoin, Dogecoin and Shiba Inu, declined 2-4 per cent each.
Edul Patel, CEO and co-founder, Mudrex, said that majority of the tokens dropped as the sentiment around cryptos remains bearish and market participants look for clues about the pace of interest rate hikes.
Despite the success of Merge, Ethereum breached the $1,500 mark, he said. “ETH’s next primary support level is at $1,400, while the immediate resistance is $1,500. If it fails to hold these levels, we may see Ethereum test the $1,300 level.”
However, experts believe there is no fundamental reason behind this steep fall. “It’s more about the speculative tussle between the bulls and bears to profit from their respective positions,” said Khaleelulla Baig, Founder, Koinbasket.
Everything has gone smooth with the Merge upgrade, the bears could have realised their short positions not yielding desired outcome, hence trying to safeguard the upcoming liquidity and expiry challenges by some selling pressure, he added.
As an implication, The merge has welcomed the stakers to make money, whereas miners’s reward and minting money will die its natural death experts believe.
Ethereum miners are finding it increasingly hard to make money after the Merge as too many of them are switching to alternative coins, crushing mining profitability.
On the other hand, a sell-off event post the Merge was expected, says Vikram Subburaj, CEO, Giottus Crypto Platform, who believes that sell-off to be short lived.
“Many short-term traders bought ETH leading up to the event to gain on the positive momentum of ETH price action, and to acquire any new forked tokens, ” he added. “Once their motives were established, they sold their positions.”
Ethereum as an asset is a good long-term buy at current prices though it may be impacted by wider macroeconomic factors in the coming months, Subburaj suggested.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
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