The successful merge carried out by the Ethereum network this week hasn’t staved off the effects of crypto’s ongoing bear market, with Ethereum’s price down around 8% in the past 24 hours.
Ethereum, the second largest cryptocurrency by market cap, is currently trading hands around $1,460, down 8.2% over the past 24 hours, according to CoinMarketCap.
Over the past seven days, Ethereum shed more than 14% of its value, tumbling from $1,740.88 on Wednesday to as low as $1,448.95 in the early trading hours of Friday. Daily trading volumes were also down 19.11% to $20 billion in the last 24 hours.
This bearish price shift also led to over $127.4 million in Ethereum liquidations, according to data from Coinglass.
More than 80% of these liquidations, over $103 million, were long positions from bullish crypto traders.
Why is Ethereum down following the merge?
The impetus for Ethereum’s recent bearish price action is multi-pronged.
However, perhaps the most significant factor was SEC Chair Gary Gensler’s recent statement that proof-of-stake cryptocurrencies could be considered securities.
The merge saw Ethereum shift from the proof-of-work (PoW) consensus mechanism employed by cryptocurrencies such as Bitcoin, to a proof-of-stake model.
Under the new consensus, Ethereum offers returns to depositors in a process commonly known as “staking.” Gensler argued the native assets of proof-of-stake blockchains could pass the Howey test, a critical test used to determine whether an asset qualifies as an investment contract, and therefore falls under federal security laws.
Gensler’s comments come amid broader bearish action from the crypto market, sparked by the release of recent CPI figures that point to higher-than-expected inflation. Over the past week, Bitcoin, the biggest cryptocurrency by market capitalization, is down around 4.6%, and is currently trading below the psychologically significant level of $20,000.