Ethereum, the largest altcoin, has fallen 25% in the past seven days. It is clear that the much-hyped merger narratives have failed to live up to their ‘expected’ charm. Despite the fundamental change in the dynamics of the show, the event resulted in the “selling of news” in price.
Now, the question is – From institutional backlash to retail, can things get any worse for the second largest cryptocurrency?
Writings on the wall
Ethereum has successfully delivered Merge after years of anticipation, but the price of ETH has plummeted. The number two crypto has lost 25% of its market value over the past week.
This has led many to believe that the event has turned into what the trade describes as a “buy the rumour, sell the news” trigger.
Was the merger just another classic ‘news selling’ event? The chart screamed yes! Investors bought ETH when the merger date was announced earlier this year and sold it when the actual event happened. So reaping the benefits.
In comparison, BTC fell by only 5%. So the overall crypto correction narrative didn’t have much basis for ETH. In fact, the flagship token still struggled to keep up with the Terra fiasco which seriously hurt its price.
While ETH in smart contracts has been on an upward trend since 2020, the collapse of Terra in May halted this growth, according to the report.
Since May 9, when Terra collapsed, the total percentage of ETH in smart contracts has peaked at 30%. Meanwhile, protocol revenue has declined with a combination of the crypto bear market, increased volume on L2, and contract protocol upgrades for gas efficiency.
Even ETH’s offering in smart contracts repeated the same scenario.
#ETH in smart contracts had an upward trend until the collapse of the Terra ecosystem.
ETH in smart contracts was 27% at the end of August, down 2% from June. pic.twitter.com/PbtJEh60zE
— Messari (@MessariCrypto) September 20, 2022
All is lost?
At the time of writing, Ethereum has fallen below the $1.4k mark, suffering another 2% correction in 24 hours. But some features remain intact despite the situation.
First, a big change in the daily issuance of ETH. The data showed that the supply of new ETH in the market has dropped by over 90% compared to what it was during the PoW era.
As seen above, ETH issuance has dropped dramatically. This could have a favorable impact on the price, given that the demand for the cryptocurrency remains the same or increases in the future.