Ethereum, the largest altcoin, is down 25% in the past seven days. Clearly, the much-hyped Merge narrative has failed to live up to its “expected” charm. Despite a fundamental change in its emissions dynamics, the event led to a “sell news” development in prices.
Now, the question is – will things get worse for the second-largest cryptocurrency from institutional to retail?
writing on the wall
After years of anticipation, Ethereum successfully delivered Merge, but the price of ETH is struggling. The second-ranked cryptocurrency has lost 25% of its value in the past week.
This prompted many to believe the event became a trigger for what traders described as “buy the rumor, sell the news.”
Source: Delphi Digital
Is the merger just another classic “sell the news” event? The chart really screams yes! Investors bought ETH when the merger date was announced earlier this year and sold when the actual event happened. So, reap the benefits.
In contrast, BTC is down just 5%. As such, the overall crypto correction narrative doesn’t hold much ground for ETH. In fact, the flagship coin is still struggling to move forward from the Terra fiasco that severely hurt its price.
While ETH in smart contracts has been on an upward trend since 2020, Terra’s debacle in May stopped that growth, according to a report.
As of May 9, when Terra crashed, the total percentage of ETH in smart contracts peaked at 30%. Meanwhile, the protocol’s revenue has declined due to the crypto bear market, increased L2s trading volume, and gas efficiency upgrades for protocol contracts.
Even the supply of ETH in smart contracts reiterates the same.
#ETH The number of smart contracts was on an upward trend until the Terra ecosystem collapsed.
At the end of August, ETH in smart contracts was 27%, down 2% from June. pic.twitter.com/PbtJEh60zE
— Messari (@MessariCrypto) September 20, 2022
All lost?
At the time of writing, Ethereum fell below the $1.4k mark, experiencing a fresh correction of 2% in 24 hours. However, despite the situation, some features are still intact.
First, the daily ETH issuance has changed dramatically. Data shows that the supply of new ETH in the market has dropped by more than 90% compared to the PoW era.
Source: Ultrasound.money
As shown above, the issuance of ETH has dropped sharply. This could have a beneficial effect on the price, given that the demand for the cryptocurrency remains the same or increases in the future.
