Updated on January 9, 2023 12:50 PM
Ethereum’s price has taken a disastrous hit. Post-merge investors were expecting the price of ETH to skyrocket, but the market conditions are just not in favor. Due to the macroeconomic conditions and centralization concerns over Ethereum, the blockchain has been negatively affected and facing a huge sell-off.
Compared to the US dollar and Bitcoin(Bitcoin), Ethereum has taken the most hit. On Sept. 22, after Ethereum switched to a proof of stake mechanism, ETH/BTC and ETH/USD trading pairs were down by more than 17% and 20%.
The fall of Ethereum’s price has been a counterfeit of multiple factors. The rising inflation, skyrocketing price of consumer goods, and the Fed reserves increasing the rate hike by yet another 75 basis points have all affected ETH in some way. Investors are withdrawing their money from assets and keeping them as cash reserves. The market conditions look scary to many and have been a major reason for the declining value of assets like Ethereum and Bitcoin.
We love blockchain and crypto as it aims to create a decentralized world where power is in the hands of the majority, not a central authority. But post the Merge, Ethereum has been facing a lot of flak. The reason is people believe it has become too centralized. Hence, this affected people’s trust in the blockchain and became a major reason for its fall.
After the Merge, many institutional investors have reduced their exposure to Ethereum and related investments. On Sept. 16, Ethereum witnessed a withdrawal of over $15.4 million in funds. Counter to that - Bitcoin attracted a whooping of $17.4 million in investments.
The proof of stake mechanism will reduce Ethereum’s energy consumption by 99.95%. But unlike proof of work, proof of stake doesn’t require miners to mine the cryptocurrency. Hence, Ethereum faced another huge sell-off from proof of work miners. The miners sold approximately $40 million worth of Ether after the Merge.
Tuur Demeester, an independent market analyst, predicts that Ethereum could further face a major sell-off compared to Bitcoin in the upcoming days. He expects ETH/BTC to break down violently at some point. He concludes by saying that Ethereum is a ticking time bomb.
Over the past week, over $21 million have been rugged out. If we look at the previous outlooks, investors withdrew over $94 million from Ethereum. Ethereum is having a hard time. The signs indicate that ETH is in the most bearish phase. Investors are pulling out the money and keeping them as hard cash or diverting their portfolio by investing in other altcoins like Ripple(XRP).
Ethereum and the community are going through a rough phase of sell-off. But many investors and experts believe in Vitalik Buterin and the network itself. People believe Ethereum has a deep ecosystem whose value is still unknown to the world. Ethereum still withholds its position as the second largest cryptocurrency. With time and improving market conditions, Ethereum could regain back its reign.