Ether drops to lowest level in seven weeks as traders shift attention from the Merge

Investors have rotated back into Bitcoin and focused on the broader sell-off in riskier assets

Experts say traders viewed the move to a more energy-efficient version of Ethereum as a 'sell-the-news' event. AFP

Ether dropped to a seven-week low and a bonus token awarded to holders of the digital asset tumbled as cryptocurrency investors turned their attention back to the broader sell-off in riskier assets.

Ether, the native currency of the Ethereum blockchain, fell for five straight sessions, dropping as much as 6.5 per cent to $1,407 on Friday to the lowest since July 27.

It was largely holding those losses on Saturday.

The transition of the network to a more energy-efficient method of handling transactions known as the Merge captured the attention 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, said 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 up about 0.6 per cent to $19,861 as of 9.20am UAE time on Saturday. The largest cryptocurrency by market value slumped about 7.3 per cent in the week ending on Friday, compared with a 16 per cent 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, chief operating officer of the Okcoin exchange.

The additional cryptocurrency token that investors received after the Merge has tumbled 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 rose to a price of $60.68 on Thursday, according to data from CoinMarketCap.com that reflects the value of IOUs on some exchanges, and was on bourses such as FTX before Ether holders received the token. It was trading at about $10.59 on Saturday.