© Reuters
By Ambar Warrick
Investing.com– Ethereum fell sharply in cryptocurrency markets on Friday after its much-anticipated move to proof-of-stake was successfully executed, as headwinds from a stronger dollar and rising US rate expectations also weighed.
The plunged 10% to $1,474.29, its lowest level this month. The losses saw all the gains made as it neared its proof-of-work abandonment pivot, dubbed the meltdown, wipe out.
The merger went live on Thursday and has so far had no hitches.
This move sees Ethereum moving away from mining in favor of staking, and has dramatically reduced the energy costs of the eponymous blockchain. It is also expected to help the blockchain improve its scale and transaction speeds eventually.
But the shift to proof-of-stake has also raised concerns about Ethereum’s security, and drawn criticism from some in the crypto community who embrace proof-of-work and mining tokens.
Ethereum’s losses also came as ETHPoW, a miner-backed hard fork of Ethereum, tumbled ahead of its official launch.
Broader cryptocurrency markets retreated after strong U.S. economic data indicated the likely will have ample leeway to raise interest rates sharply this year.
fell 2.5% to fall back below the $20,000 mark, while the total cryptocurrency market capitalization plummeted well below the $1 trillion mark.
Rising US interest rates have been the biggest factor behind crypto’s losses this year, with the space losing nearly two-thirds of its market capitalization when the Fed began raising rates.
The rate hikes came as a shock to investors who had benefited from nearly two years of ultra-free monetary policy, which created enough liquidity to fuel crypto’s stellar rally in 2021.
But with global recession risks steadily rising, replicating such a rally could be a long way off in the near future.