Ether led digital assets lower after a groundbreaking software upgrade of the token’s underlying network turned into what some market observers labelled a “sell-the-news” event.
The second-largest token dropped by about 8 per cent on Friday to trade around $1,478 at 9.20am UAE time, according to Coinbase data. It slid more than 6 per cent on Thursday.
Ether has fallen in value since mid-June after a rally caused in part by optimism about the Ethereum blockchain update, known as the Merge, to slash the network’s energy use.
“Now the excitement around the Merge is done, and we don’t have a catalyst for Ethereum in the short term,” said Martha Reyes, head of research at cryptocurrency exchange broker BeQuant.
“It would be natural to expect a bit of rotation back” into Bitcoin, she said.
Bitcoin dropped as much as 1.4 earlier and was trading below $20,000. Smaller coins such as Avalanche, Polygon and Solana also wavered.
Ethereum’s revamp makes it vastly more energy efficient and paves the way for it to scale up and become quicker, the network’s developers have said.
The move to a proof-of-stake approach, from proof-of-work, was years in the making and seems to have gone smoothly, although hiccups remain possible.
“The Merge event definitely was a success,” said Preston van Loon, co-founder of Prysmatic Labs and an Ethereum developer.
“What we will see over time is: do the metrics hold up? The switch to proof-of-stake has really unlocked the next stages of upgrades.”
Cryptocurrency prices have tumbled this year, along with other riskier investments, weighed down by tightening monetary policy to fight high inflation.
The MVIS CryptoCompare Digital Assets 100 Index has shed about 60 per cent in 2022.
However, the Merge is viewed as a potential long-term catalyst for Ether as it improves the environmental profile of Ethereum.