Ethereum continues its decline after the merge. ETH has dropped over 25 percent in the last 7 days. It has lost more than 10% in value in the last 24 hours. Thus, it saw levels below $1,300. Ethereum is not the only cryptocurrency facing the weight of the market. Bitcoin has lost more than 7 percent momentum in the last 24 hours and dropped to $18,000.
Why did Ethereum crash?
cryptocoin.com As we have reported, Ethereum completed a very successful merger. Experts believe that the success of such a large-scale software update is remarkable. However, ETH prices dropped after the merge. Many experts point out that the merge could be a “selling on the news” event. Because Merge’s achievements are long-term, it can have an overwhelming response. Experts also underline that the merger was completed in the worst possible macroeconomic conditions. August’s US Consumer Price Index highlighted worse-than-expected inflation.
The FED, which has already taken a hawkish stance, has become even more hawkish. The market is also pricing in the possibility of a 100 basis point rate hike. But many say the Fed is likely to continue with the expected 75 basis point increase. Tesla CEO Elon Musk believes that another big hike from the Fed will lead to deflation. Cathie Woods of Ark Investments has the same opposite view of economics. Meanwhile, the World Bank believes the market will face recession next year. According to analyst Kevin Svenson, we could see $1,000 if ETH continues to drop.
Will ETH price experience a long-term decline?
According to major crypto and Ethereum influencer “VivekVentures,” Ethereum’s price action is “short-term noise.” He believes that Bitcoin maximalists are currently spreading FUD around Ethereum and the merge. Vivek reveals that since the merge, Ethereum’s issuance has dropped by 95 percent. This means that Ethereum needs to issue 95 percent fewer tokens without any shortcomings in security.
In the 3 days after Merge, Ethereum mined less than 3,000 coins. In PoW mode, it would have issued over 40,000 tokens. Vivek also explains the difference in selling pressure due to the change of consensus mechanism with the merge. The current Proof-of-stake model represents significantly less sales pressure than the previous Proof-of-Work model.
Ethereum validators cannot sell their block rewards for a period of 6 to 12 months. As a result, the selling pressure on Ethereum is near zero at the moment. Vivek also reveals that Ethereum’s gas fees are currently more than 15 gwei. As a result, there is buying pressure on Ethereum due to the deflationary effect of the merge.
Benjamin Cowen expects “significant pain” on ETH
Finally, popular crypto analyst Benjamin Cowen says he expects Ethereum (ETH) to witness significant pain as Bitcoin (BTC) and the stock market point to bearish moves. Analyst NASDAQ says the S&P 500, Bitcoin and Ethereum seem ready to test at least recent lows.
Since Ethereum is significantly more volatile than Bitcoin and the stock market, Cowen points out that ETH’s critical technical support is much further away than other assets. The analyst says that Ethereum will be hit the hardest in a downturn in all risk assets. He expects ETH to do the same if Bitcoin tests its low. But the problem with that is: Bitcoin drops 10 percent to test its previous low. ETH, on the other hand, should drop by 40 percent.
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