Ethereum has enjoyed strong growth and bullish price action since the start of the year, with the asset gaining more than 200% over the last three months alone, according to CoinMarketCap data. But overnight, Ethereum saw significant losses as its price dropped by more than 15% from around $1,050 to $925, market data shows. The move lower took place as traders apparently took profits on their positions and as concerns that US interest rate hikes could prompt investors to redeem out of the cryptocurrency markets. (See also: Is Bitcoin Undervalued?)
Since the Ethereum network, the technology that underpins ether and other cryptocurrencies, underwent a significant update known as the merge, ether has declined more than bitcoin.
Blockchain technology called Ethereum makes it possible for programmers to create apps on top of it. The native coin used by Ethereum is called Ether.
The merge is an update to Ethereum that switches the proof-of-work approach for transaction validation to a proof-of-stake method. According to supporters, this would significantly increase the energy efficiency of verifying transactions on Ethereum, which has been widely awaited by the cryptocurrency community.
Even if the update was completed, ether has decreased more than bitcoin.
Ether has decreased by about 15% between September 15, when the integration was finalised, through about 4:30 a.m. ET on Tuesday. In the same time frame, Bitcoin has decreased by about 3%.
Before the network update, the price of ether had nearly quadrupled from the year’s low point in June, exceeding bitcoin’s gains by a significant margin.
The merger was already “priced in” for ether, according to Vijay Ayyar, vice president of corporate development and international at the cryptocurrency exchange Luno, and the “real occurrence was a’sell the news’ situation.”
Ayyar claims that traders are also transferring funds back into bitcoin from ether and other alternative digital currency because they “believe that Bitcoin will outperform for a few months from now.”