Ethereum (ETH) Slips Below $1,600: Here Is Why It’s Not Necessarily a Cause for Concern

The broader cryptocurrency market has continued shedding value on the back of the negative sentiment triggered towards the end of last week. Bitcoin has retraced roughly 12% over the past seven days, while altcoins, including Ethereum, have suffered huge losses during the same period. The premier altcoin has shed roughly 17%, while Solana (SOL), Cardano (ADA), and Avalanche (AVAX) have registered losses of 20.95%, 18.85% and 20.05%, respectively, during this period.

The dip is a blow to bulls that were anticipating a weekly close above the $2,000 mark and a worst-case scenario of the token holding at support zones above $1,600.

ETH/USD 7-day trading chart

The ETH/USD 7-day trading chart shows that the pair has fallen below $1,550 twice since Saturday as bulls fight to stave off further declines below the current price range. Ethereum (ETH) was last observed trading at $1,568- down 3.58 % on the day.

Arthur Hayes says declines shouldn't worry investors

In a blog post published last week, former BitMEX founder Arthur Hayes argued that the recent underwhelming Ethereum price action should not worry token holders. Hayes discussed the Merge as the main trading event, highlighting the possible outcomes in the market depending on the upgrade. He theorized that the recent losses present an opportunity for bulls to assess different plays.

In his opinion, there is now less likelihood of a “buy the rumor, sell the news” outcome as most sellers have already dumped. The crypto capitalist maintained his bullish stance on the premier altcoin, adding that only a setback in the Merge timeline could make him consider his position in the ETH market. He is, however, confident that the event is on track for September 15 – a tentative target confirmed in the Ethereum All-Core Developer (ACD) meeting on August 18.

“The only thing that could cause the TTD to change would be a massive drop in hashrate once Bellatrix is hit. If, for example, we saw that [the current TTD prediction] would be hit several weeks past September 15, we could coordinate a TTD override, “core dev. Tim Beiko wrote last week after the call.

The ACD call also addressed other issues, including the deprecation of Kiln testnet, censorship of transactions on Ethereum by MEV relays, governance questions, and the recent blacklisting of crypto mixer Tornado Cash.

Merge preparations in full swing as interest in staking rises

The majority of concerns around the upcoming mainnet transition to PoS consensus have thus far been resolved. The final Merge date now ultimately depends on the network's hashrate.

Earlier today (August 22), Ethereum 2.0 client Teku released the version 22.8.1 update, which features the Bellatrix network upgrade and transition configuration. Mainnet users have two weeks (until Sept. 6) to upgrade according to the GitHub post. Ethereum client Go Ethereum (Geth) also released Promavess (v1.10.22) today, which will enable the Merge.

While there is still excitement around the Merge, its associated euphoria in the Ether market has waned, reflected by the collapse of the previously northbound movement. Ether (ETH) price doubled between July 14 and August 14 when it peaked at a multi-week high of $2,020, the token has since shed half of these gains.

ETH/USD price chart since July

The nearing of the Merge event has also expectedly led to growing interest in staking. Etherscan data showed a balance of 13,345,160 Ether in the Eth2 Deposit Contract translating to $20.8 billion, at the time of writing. Crypto reporter Colin Wu shared on Twitter earlier (August 22) that the stake rate is now above 11.17%, with an average of 36,000 ETH being staked weekly.

Meanwhile, on-chain exchange flow data for the just concluded week shows that the inflow and outflow volume nearly balanced around $2.4 billion with a net flow of -$53.4 million.

To learn more about Ethereum visit our Investing in Ethereum guide.