Why Ethereum Price is Crashing and What Can Arrest its Fall

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Despite the announcement of the Ethereum merge, the price of the largest altcoin in the world is crashing. However, an Ethereum increase in price following the new network upgrade? Let’s take a look. 

Ethereum and the broader cryptocurrency markets have been descending since 2022 - amidst the economic crisis following the pandemic, increasing inflationary data and interest hikes. In November 2021, Ethereum (ETH) reached an all-time high (ATH) of $4,900. 

In the chart above, Ethereum (ETH) has witnessed a significant price correction since 13th September 2022. From $1,748 on the 13th, the largest altcoin plummeted to under $1,300 on September 18th - equating to a 25% price correction in under a week. Currently, Ethereum is trading at $1,350 - 72% below its November highs. 

Surprisingly, the sudden fall in the price of Ethereum has corresponded with the network’s new merge update - which will see Ethereum shift from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus. But why has the token corrected despite the announcement of the merge? 

On September 15th 2022, Vitalik Buterin, the creator of Ethereum, tweeted announcing the successful launch of the Ethereum verge. Earlier, Ethereum’s network was facing trouble relating to scalability and slow transaction processing times. The new merge is expected to make the network a faster, cheaper and more scalable solution. 

Despite the launch, Ethereum has corrected right after the announcement. One of the reasons for this is the ‘buy the rumour, sell the news’ phenomenon. In trading, this means that a cryptocurrency's price tends to go up