Several catalysts contributed to Ethereum’s depreciation throughout this period. First, the price of ETH plummeted against the dollar, mirroring similar drops everywhere in the crypto market due to the Federal Reserve’s 75 basis point (bps) rate hike. Second, spectators chastised Ethereum for becoming overly centralized following the Merge. So far, only five companies have produced 60% of the blocks. The largest stake is by Lido DAO, an Ethereum staking service, which placed 4.19M ETH, or more than 30% of the total amount staked into Ethereum’s official PoS smart contract.
Investors are also concerned if Ether’s regulatory status would change due to the merger. Gary Gensler, the chairperson of the US Securities and Exchange Commission (SEC), cautioned on September 17 that the Ethereum upgrade could result in the crypto asset being regulated as securities. Ethereum funding rates are still negative.
Funding rates represent payments between buyers and sellers. When rates are negative, sellers can squeeze the market by offering buyers a premium while keeping the price short. Funding rates frequently gauge the market mood.
Data from crypto futures markets show that many investors have closed out hedged positions in the hours following the Merge, indicating that they are wrapping up trades they made in the previous month or last few weeks to bet on possible event outcomes. Such as a revolt by crypto miners who want to continue working on a “proof-of-work” system similar to Bitcoin’s.
More stable Bitcoin is trading at US$19,400, up more than 3% this morning. Ripple’s XRP coin has gained more than 60% this week, with nearly half of that gain occurring in the last day alone.
Other notable movers this week include the Stellar network’s XLM token, which increased its market worth by 27.5% to US$3.32B, and Algorand (ALGO), which increased its market cap by more than 30% to US$2.72 billion.
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