Ether dropped to a seven-week low, and a bonus token awarded to holders of the digital asset tumbled by more than 50% as crypto investors turned their attention back to the broader selloff in riskier assets.
Ether, the native currency of the Ethereum blockchain, was down for a fifth consecutive session, dropping as much as 6.5% to US$1,407. The transition of the network to a more energy-efficient method of handling transactions known as the Merge had captured the focus of investors for weeks.
“It’s likely due to a worsening macro backdrop that is causing a decline in value of all risk assets in general,” Christine Kim, a research associate at Galaxy Digital, wrote on Twitter. “There was a widespread view among traders that the Merge was a ‘sell-the-news’ event despite the upgrade’s long-term positive impacts.”
Bitcoin was down about 1.5% to $19,548 as of 2.58pm in New York. The largest cryptocurrency by market value has slumped about 9.8% this week, compared with a 19% slide in Ether.
“With the Merge ending up mostly a non-event and overarching macro headwinds still at play, traders unwound their ETH positions and rotated back into Bitcoin,” said Jason Lau, the San Francisco-based chief operating officer of the Okcoin exchange.
The additional cryptocurrency token that investors received after the Merge tumbled as much as 60% since late Thursday.
EthereumPOW, as the offshoot is known, represents much of the legacy computing operations of the blockchain that chose not to participate in the software upgrade. Ethereum moved from a so-called proof-of-work system to a proof-of-stake method for securing the network.
The new cryptocurrency was listed at a price of as much as $33, according to data from CoinMarketCap.com over the past 24 hours, and on exchanges such as FTX before Ether holders received the token. It was trading at about $9.27 late Friday.
“Now that the Merge has (very successfully) concluded, we’ve run out of near-term positive catalysts and we’re running into a wall of bearish macro sentiment,” said Henry Elder, head of decentralized finance at Wave Financial.
