Ethereum meltdown turns into news event selloff as ETH price drops 20% since

Last week, we witnessed one of the most anticipated events in the cryptocurrency industry – Ethereum’s transition to a proof-of-stake based consensus algorithm.

Despite the fundamental shift in its issuance dynamics, the cryptocurrency is down more than 20% since the merger took place in an event that caused a short-term “sell the news” type price move. “.

Ethereum successfully merges, but ETH price takes a beating

Ethereum dropped the Proof of Work consensus algorithm for Proof of Stake on September 15, 2022. This was arguably the most important industry event this year.

At the time of the merger, ETH was trading at around $1,600 and even surged to around $1,650 in the hours that followed. However, that’s when the bears took full control of the market and sent prices to a 2-month low below $1,300. As of this writing, ETH is trading at around $1,330, down 8% in the past 24 hours and down around 20% since the merger.

This led many to believe that the event turned into what trades describe as a “buy the rumour, sell the news” trigger. In other words, investors bought ETH when the merger date was announced earlier this year and sold it when the actual event took place.

Another possible reason for the drop could be the fact that many people could have bought ETH in anticipation of the ETHW airdrop. It should also be noted that the macroeconomic situation remains difficult and that the market anticipates the Fed’s latest decision on interest rates later this week.

Macro Benefits for ETH Price

Regardless of the short-term price action, ETH is seeing serious market-related upsides post-merger.

Namely, this is a massive change in the daily issuance of ETH. The data shows that the supply of new ETH in the market has decreased by more than 90% compared to what it was during the PoW era.

The following is a simulation of how PoW issuance compares to current PoS issuance, as well as Bitcoin.

Source: Ultrasonic Silver

As seen above, ETH issuance has fallen dramatically – something that should, in theory, have a beneficial impact on prices, given that demand for the cryptocurrency remains the same. or increase in the future.

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