Ether falls as Ethereum overhaul turns into ‘Sell the News’ event

Ether drove digital assets lower after a game-changing software upgrade to the token’s underlying network turned into what some market watchers called a “sell the news” event.

Ether drove digital assets lower after a game-changing software upgrade to the token’s underlying network turned into what some market watchers called a “sell the news” event.

The second-largest token fell 3.8% on Friday and was trading around $1,475 as of 12:40 p.m. Singapore after falling more than 6% on Thursday. Ether has been riding a rally since mid-June sparked in part by optimism over Ethereum’s update – the merger – to reduce network power consumption.

“Now the excitement around the merger is over, and we don’t have a catalyst for Ethereum in the near term,” said Martha Reyes, head of research at BeQuant, a crypto exchange and prime broker. “It would be natural to expect a bit of rotation” in Bitcoin, Reyes added.

Bitcoin fell 1.4% earlier and was trading below $20,000. Smaller pieces such as Avalanche, Polygon and Solana also faltered.

Ethereum’s overhaul makes it much more energy efficient and paves the way for it to scale and become faster, network developers said. Moving to a so-called proof-of-stake approach from proof-of-work has taken years and seems to have gone smoothly, although hiccups are still possible.

“The Merge event was definitely a success,” Prysmatic Labs co-founder and Ethereum developer Preston Van Loon told Bloomberg Television. “What we’ll see over time is, are the metrics holding up? Moving to proof-of-stake has really unlocked the next stages of upgrades.

Crypto prices have fallen this year along with other riskier investments, weighed down by tighter monetary policy to combat high inflation. The MVIS CryptoCompare Digital Assets 100 Index lost almost 60% in 2022.

The merger, however, is seen as a potential longer-term catalyst for Ether, as it improves Ethereum’s environmental profile.

“A lot of additional demand will likely come to the network via financial institutions, many of whom are really committed to looking after the Ethereum network in terms of understanding the technology and even potentially managing some of the infrastructure,” Joe Lubin, the founder of ConsenSys and co-founder of Ethereum, said in an interview on Thursday.