Ethereum, world’s 2nd largest cryptocurrency drops 10% post “merge”

Most risk-driven assets sank for the day ahead of a widely expected 75 basis point bps hike by the Fed on Wednesday. Traders are also pricing in the possibility of a 100 bps hike. The move will bring U.S. rates to their highest level since the 2008 financial crisis, which is expected to weigh heavily on speculative assets such as stocks and crypto.

Ethereum prices sank to a two-month low on Monday as losses after the blockchain’s shift to proof-of-stake continued, while the broader crypto market weakened ahead of a Federal Reserve meeting this week.

The world’s second-largest cryptocurrency dropped 10% to $1,303 – its weakest level since mid-July. The token has now lost nearly a quarter of its value since the move to proof-of-stake (PoS), dubbed the ‘merge,’ went live last week.

While the move drastically cut Ethereum’s power consumption, it was also criticized for making the blockchain arguably less decentralized, as well as setting a high buy-in for earning staking rewards, at 32 Ethereum.

Ethereum’s recent losses have now unwound all the gains made in the lead-up to the merge, with token having largely underperformed the broader crypto market.

Bitcoin, by comparison, is down a little over 6% in the past week. But concerns over rising U.S. interest rates weighed further on the crypto market on Monday. Bitcoin, the world’s largest token, slumped 6% to $18,811, while total crypto market capitalization fell to $910 billion, according to data from CoinMarketCap.

Most risk-driven assets sank for the day ahead of a widely expected 75 basis point bps hike by the Fed on Wednesday. Traders are also pricing in the possibility of a 100 bps hike. The move will bring U.S. rates to their highest level since the 2008 financial crisis, which is expected to weigh heavily on speculative assets such as stocks and crypto.

Crypto was hit particularly hard by rising interest rates this year, given that a bulk of the asset class’s stellar rally in the past two weeks was driven by ultra-loose monetary policy. Total market capitalization is down over $2 trillion from record highs hit last week, with no respite in sight.