A week after The Merge, the price of Ether (ETH) is down 11.5%, contrary to the bullish view of many investors. Part of this performance is linked to former miners, who are starting to sell their ETH. According to many analysts, these sell-offs could become a source of short-term downward pressure on the cryptocurrency’s price. So far, miners have sold around US$319 million, or just over R$1.5 billion in current values “Millers pouring ETH is an excess that we will have to overcome in the coming months to resume the uptrend, but it will happen,” wrote Lucas Campbell, editor of the Bankless newsletter.
Miners stop accumulating and sell ETH
In the years and months leading up to Ethereum’s historic shift, miners amassed nearly $341 million worth of ETH. Until the 14th, mining activity was a great source of income for this group. With The Merge, ETH mining ended, which made miners lose this source of income. As a result, they started selling their ETH reserves. According to OKLink, miners dumped more than 16,000 ETH between the 12th and 19th of September. The decline reduced the miners’ combined balance to around 245,000 ETH, or around $319 million. Lucas Outumuro, head of research at IntoTheBlock, attributed the decline in balances to “miners moving to other blockchains”. They are “taking the profits from their ETH holdings,” he said.
ETH sales by miners. Source: OKLink.
airdrop effect
It is also possible that some miners have sent ETH to exchanges in order to receive an “airdrop” of new tokens. In fact, at least two Ethereum hard forks took place after The Merge: EthereumFair (ETF) and EthereumPoW (ETHW). On the other hand, many investors bought ETH in order to receive these airdrops – seen as “free money” by the market. This is why the price of ETH skyrocketed in the weeks before the merger, as some traders also wanted the airdrop. Others speculated that the change could lead to an increase in institutional investment. But the hard forks tokens turned out to be a huge failure. ETHW, for example, dropped 90% in the days following The Merge, and ETH also plummeted.
Interest in the United States
The sale also coincided with preparations for Wednesday’s Federal Reserve meeting, which raised US interest rates. With the decision, the rate rose to a band between 3% and 3.25%, and the Fed indicated that it intends to make further increases in 2022. With the decision, the Fed puts more pressure on risky assets, which tend to lose more value. And in the case of ETH, miners lost the incentive to hold their tokens. “If miners accumulated Ethereum at a profit, or needed to pay their electric bill, they would be incentivized to sell at a profit, especially with the expected and actual increase in volatility,” said Alexandre Lores, director of blockchain research at Quantum Economia. It is possible that the miners’ move contributed to the immediate price weakness following The Merge, according to Jeff Dorman, chief investment officer at digital asset management firm Arca. The price of ether was trading around R$6,765 this Friday, up 1.22%. Also Read: FIFA NFTs Collection Hits Market, ALGO Token Jumps 26% Also Read: Zilliqa Announces Web 3 Game Console With Mining Capabilities Also Read: Vasil Hard Fork is Successfully Activated on Cardano
