The price of Ethereum, the second-largest cryptocurrency in the world, continued to fall over the weekend even after the network’s widely reported technical change known as “the Merge”. This is also a result of the remarks from the head of the SEC saying that the cryptocurrency might need to be treated as a security.
While bitcoin, the most well-known cryptocurrency in the world, is currently down $19,557.70, Ethereum is trading at just $1,379.98.
- Ethereum continues to plummet even after the long-anticipated merge
- The SEC chairman believes that Ether can be treated as security given its recent migration to a proof-of-stake algorithm
- The price of the crypto token is expected to still increase soon, given the expected impact of the merge on the Ethereum crypto
A short-term spike in price was not one of the many changes that the merge’s engineers promised, even though they also mentioned a significant drop in energy use and improved security.
The merge did not resolve congestion and excessive fees on Ethereum. Instead, it only set the stage for further infrastructure that might address its issues in the years to come. Anyone who had expected Ethereum to operate or look in an entirely new way on Thursday would have been let down.
Since very few people actually use Ether as payment for goods and services, switching to a “proof-of-stake” system means that those who invest in Ethereum and subsequently “stake” their Ether are treating their investment more like a security than a medium of exchange.
Additionally, staking has attracted the attention of individuals like Gary Gensler, the head of the SEC, who made remarks following the merger that worry cryptocurrency investors.
According to a Wall Street Journal report, Gensler stated on Thursday, “From the coin’s perspective…that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others.”
The latest Consumer Price Index (CPI) numbers from the U.S. Bureau of Labor Statistics showed that strong inflation persisted through the month of August. The announcement immediately sparked a large stock market sell-off and a matching decline in the value of cryptocurrencies, including Bitcoin and Ethereum. The revelation will probably lead to the Fed boosting interest rates once more to battle inflation.
Even though cryptocurrencies were intended to hold value independently of the stock market, they remain intricately linked. Tokens like Bitcoin and Ether have increased and decreased over the past few years in line with broader market developments.
Since the Federal Reserve stated its intention to implement a series of aggressive interest rate hikes to battle inflation, Ether prices have been depressed this year. Consumers are discouraged from investing in riskier assets, such as cryptocurrency, by high-interest rates.
While the merger appears to have affected the value of ETH temporarily, Ethereum’s shift to a more eco-friendly consensus process has also caught the attention of conventional financial institutions.
According to a research report published by Bank of America on Monday, significant institutional investors may soon become interested in Ethereum’s new staking model because of its security and energy efficiency. And all this can still lead to an increase in the price of the cryptocurrency in the future.
- In-depth Crypto Researcher, with a decade's experience in cryptocurrency and blockchain technology. Highly innovative and open-minded.
- Press Releases2022.12.04MetaWin Awards Winner A $31,000 Mutant Ape NFT
- Press Releases2022.12.04Fidelity Broker’s Retail Customers to Start Using Crypto Soon
- Press Releases2022.12.04Hennessy Partners with Friends With Benefit for the “Café 11” NFT Drop
- Press Releases2022.12.04Crypto Twitter: Blockchain Experts and Executives Share Their Thoughts