Bitcoin on Monday plunged to its lowest level since June 19, as investors expect the Federal Reserve to raise interest rates again later this week, with its two-day meeting due to conclude Wednesday.
traded at as low as $18,277.5 on Monday, according to CoinDesk data. Bitcoin has lost about 3.7% over the past 24 hours and almost 55% year-to-date.
on Monday plummeted to $1,282, its lowest level since July 16, despite that Ethereum recently completed its highly-anticipated Merge upgrade, which is supposed to eliminate the network’s energy consumption by more than 99%.
The Merge has transitioned Ethereum’s consensus mechanism from proof-of-work to proof-of-stake. Previously, under proof-of-work, Ethereum was secured by miners, where it requires high consumption of computational power. Now, operating on the proof-of-stake mechanism, the network is secured by stakers, or Ether holders who lock up their tokens.
“We consider the Merge as a ‘sell the news’ event,” according to Julio Moreno, senior analyst at Cryptoquant. Ether’s price rallied in the few months leading to the Merge. “Then sell orders started to increase as traders/holders looked to hedge before the Merge,” Moreno wrote to MarketWatch.
In fact, macro factors appear to be driving crypto price moves, according to some market watchers. Ether’s price barely changed when the Merge was completed, but tumbled after the core consumer-price index data in August surprised investors with higher-than-expected inflation, noted Brent Donnelly, president at Spectra Markets.
“It was weak macro conditions and absolute crickets on The Merge that was the end result,” Donnelly said in a recent note.
Industry participants are also concerned whether the Merge would change the way ether is regulated.
Last week, Gary Gensler, chairman of the Securities and Exchange Commission, said that cryptocurrencies and intermediaries that allow holders to stake their coins may pass the Howey test, which is used by courts to determine whether an asset is a security. Gensler said he wasn’t referring to any particular cryptocurrencies.
If ether is regulated as a security, the crypto “is likely to face heavy fines that ETH may not be able to endure, as well as be delisted from 90% of centralized exchanges, which will cause irreparable damage to both the user base and the price,” said Serhii Zhdanov, chief executive at crypto exchange EXMO.
Along with Ether’s drop, the Ethereum proof-of-work token, which is based on a version of Ethereum that continues to operate under the proof-of-work mechanism, has lost more than 75% of its value from a week ago, after the blockchain suffered from technical glitches and crypto exchange Poloniex, which initially showed support for the chain, chose to support a different fork called EthereumFair.
The Ethereum proof-of-work chain reflects miners’ attempt to secure new sources of revenue, as they were rendered obsolete after the Merge.