In today’s bitcoin and cryptocurrency news, discover that despite years of anticipation, Ethereum has finally released the Merge. However, the price of ETH is currently low. The market value of the second-largest cryptocurrency has dropped by 25% during the past week. Meanwhile, since the Ethereum network underwent a massive update known as the merge, Ether has decreased by roughly 15% while bitcoin has decreased by 3%. When compared to bitcoin’s gains, ether’s almost doubled from its yearly low in June before the network update. Finally, BitPay’s total crypto payments were constant during the bear market, with monthly transactions increasing from about 58,000 in 2021 to over 67,000 in 2022.
Reasons as to Why the Ethereum Merge Was a “Sell the News” Event
Original Source: Why the Ethereum Merge Was a “Sell the News” Event
Ethereum completed “the Merge” from Proof-of-Stake last week, but ETH has fallen since.
Post-Merge Ethereum selloffs
After last week’s “Merge” incident, traders are selling Ethereum.
The world’s second-largest blockchain has suffered since switching to Proof-of-Stake early Thursday. ETH was trading just above $1,606 when the Merge shipped but is now around $1,320.
ETH showed weakness in the lead-up to the event, falling Wednesday as the U.S. CPI posted a higher-than-expected 8.3% inflation rate. CoinGecko says it’s down 25.1% in a week.
Most major crypto assets are volatile, including Ethereum. September is a typically bad month for crypto values, and recent market action has added to crypto enthusiasts’ anguish after months of selloffs. Bitcoin traded at $18,684 on Monday, below $19,000. Ethereum-related coins like Ethereum Classic and Lido have also lost 12.6% and 9% in 24 hours. ETHW, the native token for the Proof-of-Work Ethereum chain released after the Merge, has dropped to $5.49.
ETH holders had hoped the Merge would spur bullish price movement for Ethereum’s native asset, however the event suffered from the “sell the news” impact. Financial markets often say, “Buy the rumor, sell the news.” It’s buying an asset before a large event in anticipation of a price spike, then selling it thereafter. Many market participants believed that Coinbase’s Nasdaq listing would catapult Bitcoin above $100,000, but the top crypto peaked at $64,000 on the day then fell over 50% of its market value in six weeks.
The Merge was anticipated since it took years to plan and was a tremendous technological triumph. The shift from Proof-of-Work to Proof-of-Stake has been discussed by Ethereum co-founder Vitalik Buterin since the blockchain’s birth.
Ethereum changed after the Merge. First, Ethereum lowered its energy consumption by 99.95% by abandoning Proof-of-Work miners. The Guardian, The Independent, and Financial Times reported on Merge’s release last week, highlighting the blockchain’s reduced carbon footprint.
With Proof-of-Stake, Ethereum cut ETH issuance by 90% because it no longer pays miners. The circulating ETH supply has increased by around 3,000 ETH since the Merge, down from 53,000 ETH under Proof-of-Work. The cut in supply was praised as a positive stimulus for ETH, with Arthur Hayes calling the Merge move a “no-brainer”
With the transition to a more ESG-friendly consensus mechanism, the idea of institutional investors committing capital in ETH generated a narrative that the Merge will boost the asset.
Despite significant advancements, Ethereum hasn’t performed as well as its biggest fans had planned. ETH supply is decreasing gradually. Similar to how Bitcoin’s value only increases months after “halving” incidents, the market may need time to digest such a huge move. With the supply cut, ETH might become a deflationary asset, or “ultrasound” as it’s been termed in the Ethereum community, although market participants may wait to buy ETH.
While Ethereum has green credentials with the transition, hedge funds and other significant players may take some time to invest in ETH (institutions and traditional finance firms tend to move slower than crypto-native investors). Merge is unlikely to change conventional perceptions of crypto and its environmental impact. The entire asset class was scrutinized in 2021 over the environmental impact of Proof-of-Work mining, and the climate issue has arguably prevented mainstream adoption. Ethereum has reduced its energy consumption, but the world’s largest cryptocurrency still employs Proof-of-Work and likely always will. Even if investors know Ethereum uses Proof-of-Stake, they may be turned off by Bitcoin’s energy usage. Similar to the ETH issuance cut, the energy usage reduction could take months or years to boost Ethereum’s appeal among institutional and ordinary investors.
Besides the Ethereum Merge, the broader crypto market and macroeconomic situation can explain ETH’s decline. Bitcoin is 70% below its November 2021 high, leading a year-long crypto market slide. In 2022, cryptocurrencies suffered substantial losses due to the Federal Reserve’s economic tightening stance. The Fed has raised interest rates all year in reaction to increasing inflation, hurting risky assets. Fed chair Jerome Powell’s latest warnings of extra “pain” suggest more hikes could be coming, especially following last week’s inflation report. The Fed wants to reduce inflation down to 2%; it will likely raise rates by 75 or 100 basis points on Wednesday.
Before Merge, Ethereum ruled. After EthereumPoW’s plans to fork the chain in August, excitement for the event skyrocketed. After the event, merchants need a new story. Ethereum’s greatest update ever turned into a “sell the news” event due to macroeconomic uncertainty and a lack of optimistic triggers. At least Ethereum’s fundamentals have strengthened for when market mood flips and crypto excitement returns.
Ether Loses 15% Since a Network Upgrade as Traders Grab Profits and Worry About Rate Hikes
Original Source: Ether drops 15% since major Ethereum network upgrade as traders take profits and fret over rate hikes
Ethereum is a blockchain that permits app development. Ether runs on Ethereum.
The merging upgrades Ethereum from proof-of-work to proof-of-stake transaction validation. This will make validating Ethereum transactions more energy efficient, according to proponents.
Despite the improvement, ether fell more than bitcoin.
Since the integration on Sept. 15, ether has dropped almost 15%. Bitcoin fell 3% in the same period.
Before the network update, ether doubled from June lows, exceeding bitcoin’s gains.
Vijay Ayyar, VP of corporate development and international at Luno, claimed the deal was already “priced in” for ether and the “real event was a’sell the news’ situation.”
Traders are transferring investments from ether and other digital currency back into bitcoin, says Ayyar, “because Bitcoin will outperform for a few months from here on.”
Investors wonder if ether’s regulatory status would change following the merge after SEC Chair Gary Gensler said cryptocurrencies that use the proof-of-stake methodology, like Ethereum, could be classified as securities. This would be regulated.
Gensler’s statements weren’t specific about ether. Investors “stake” or lock up their ether and earn returns.
Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank, warned PoS crypto may fall under SEC scrutiny.
Still on rate hikes
Crypto investors are nervous about this week’s projected Fed rate hike.
Global central banks have raised interest rates to combat inflation. Risk assets like stocks have suffered. Cryptocurrencies are associated with U.S. stock markets, especially the Nasdaq. With stocks under pressure, cryptocurrency has too.
Higher-than-expected U.S. inflation in August hurt stocks and crypto.
“From a macro viewpoint, inflation came in higher, causing a sell off across all markets, but ethereum and altcoins sold down harder,” Ayyar said.
Ayyar said investors are buying Bitcoin between $18,000 and $25,000 since June.
Any “change in the macro environment in terms of inflation or interest rate surprises” is cause for concern, he added, adding that bitcoin might touch $14,000 if it goes below $18,000.
Despite the Bear Market, Bitcoin Leads Bitpay Payments
Original Source: Bitcoin still dominates total payments on BitPay despite the bear market
Bitcoin (BTC) remains a popular payment instrument despite huge volatility, BitPay data shows.
Despite the continuing cryptocurrency winter, Bitcoin remains BitPay’s most popular payment method.
BitPay’s vice president of marketing Merrick Theobald told Cointelegraph that Bitcoin-based payments accounted for 87% of revenues last year and 52% in the first quarter of 2022. BitPay’s Bitcoin sales volumes are based on the total value of Bitcoin payments completed.
BitPay had a sales volume impact largely among non-stablecoin purchases, since stablecoin sales persisted independent of crypto price swings.
Theobald said monthly BitPay transactions rose from 58,000 in 2021 to 67,000 in 2022 despite the market drop.
Along with sales numbers, Bitcoin payment transactions have dropped this year. BitPay says BTC transaction share fell from 57% in March to 48% in July.
BitPay users are increasingly paying with Litecoin (LTC), with LTC transactions rising from 14% in March to 22% in July.
Despite a dip in Bitcoin payments during the bear market, BTC still accounts up more than 50% of all BitPay purchases. According to Theobald, this shows that Bitcoin’s original payment utility use case is still relevant. CEO:
People use BTC on BitPay more than other cryptocurrencies since it’s the oldest and most well-known, has the greatest market cap, and is an excellent digital payment mechanism.
Theobald also claimed that some consumers preferred to pay with Bitcoin during the bear market because it’s more expensive to sell BTC at an exchange and use it afterwards to buy online. BitPay gives users a direct and cheaper option to use Bitcoin to buy common things.
Bank of Russia legalizes cross-border crypto payments: report
BitPay is one of the world’s major cryptocurrency payment firms, allowing anyone to buy and accept crypto. BitPay serves many U.S. companies, including Newegg, Verifone, and Shop.com. BitPay is popular in the US for administrative payments and fundraising campaigns.
Summary of today’s Bitcoin and Cryptocurrency news
Overall, Ethereum’s greatest update ever turned into a “sell the news” event since the Merge finished during a moment of macroeconomic instability with no bullish triggers in sight. If and when market mood changes and interest in cryptocurrencies returns, at least Ethereum’s foundations will be stronger.
In addition, according to Ayyar, Bitcoin has been trading in a range of around $18,000 to $25,000 since June. But a “change in the macro environment in terms of inflation or interest rate surprises, is clearly cause for concern,” he added, adding that if bitcoin drops below $18,000, the cryptocurrency might test levels as low as $14,000.
Finally, to buy goods and services with cryptocurrency or to accept cryptocurrencies as payment, BitPay is a popular option. Newegg, Verifone, and Shop.com are just a few of the American businesses that utilize BitPay’s crypto payment services. When it comes to administrative payments and fundraising campaigns in the US, the BitPay network has also become increasingly popular.