Consolidation, which was completed earlier this month on September 15, changed its mechanism to proof of stake (PoS), making it more energy efficient. It used the previous Proof-of-Work (PoW) mechanism.
Ethereum, which is expected to regain the $2,000 mark after a software upgrade, hovered around the $1,325 mark on Saturday. It recently tested the $1,200 level earlier this week.
Ethereum’s total market capitalization has plummeted to just over $160 billion, with volume flat at around $17.5 billion over the past 24 hours, coinmarketcap data shows.
What is hurting Ethereum?
Market experts believe that Ethereum has fallen prey to the ‘buy on the rumor and sell on the news’ theory of Consolidation, along with central bank monetary tightening. They say high security holes in decentralized applications. Khaleelulla Baig – Founder – Koinbasket says Ethereum is losing traction as the US government points out that treating it as a security rather than a commodity, thus creating fear and uncertainty about regulations stricter regulations and tax implications.
Trials and tests conducted by mainstream web2 institutional investors to test the waters in the crypto market are also exerting some negative pressure on the overall crypto market spilling over. Ethereum, Baig added.
Ashwani Kumar, Founder & CEO of HelperWorld, said the platform has become less decentralized after the switch to PoS mechanism. “The Ethereum Consolidation or upgrades could make it easier for hackers to exploit bugs in the code. ”
The way forward
Market consensus favors a successful Ethereum merger, however, large-scale issues with the transition to proof-of-stake could be disastrous for Ethereum price in the short term.
“Consolidation is one of the most anticipated events in the history of Ethereum and investors are eyeing the price of Ether,” Kumar said. “More adoption will lead to more transactions and therefore higher yields.”
The merger will certainly bring many benefits to the Ethereum network. It remains to be seen how the rollout of this upgrade will impact the network.
Dileep Seinberg, Founder & CEO, MuffinPay, said that Ethereum has been a game changer in the crypto world and it is likely to hold its own.
“Ethereum will continue to be the biggest altcoin, but one should not expect an immediate rally as the market sentiment is mixed. One should wait for the dust to settle before making any calls. “, he added.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by experts are their own. They do not represent the views of The Economic Times)