Many enthusiasts in the crypto community pointed out many times that the hype surrounding the Ethereum merge was nothing but an attempt of the network to keep investors interested throughout the event and create a transitional period during which holders would be encouraged not to liquidate their long positions. However, the merge was not met with positivity despite the joyous statements and celebrations of the development team.
The immediate reaction and long-term consequences
After the merge concluded, ETH lost over 13% of its value within 6 hours. While a short-lived recovery followed right after, the new bearish trend started taking its shape promising a very long contraction of the Ethereum trading volume and cash inflow. According to CoinShares, the outflow of cash in the Ethereum ecosystem has been surpassing the inflow by a notable margin for 4 consecutive weeks.
The difference reached a worrying size of $15.4 million on September 16. While some defenders of the asset were talking that it was a trend across the whole industry, Bitcoin started receiving more inflow and the positive difference was $17.4 million on the same day meaning that investors are more interested in BTC has better fundamentals rooted in the global fiat economy and may provide a haven to investors who want to hedge against the inflation.
Just a couple of days later, ETH reached a two-months low on September 19. The price dropped to $1270 but quickly recovered and returned to, a seemingly established, $1300 support line — a very important line of defense for the Bulls. Notably, the derivatives market with many leveraged positions worsened the situation on the spot market.
Bitcoin is winning, but Ethereum faces challenges
Despite the bearish trend in all financial markets, Bitcoin was one of the best performers for many investors during the first three weeks of September. It started going down on September 13 after breaching several important resistance levels, but the price is stabilizing above the $19K support line and the inflow of cash from investors seems to be doing work and pushing the asset away from the dreaded $18K support line.