Ether decreases after the long-awaited “merge” of the smart contracts network.

Just after Ethereum network successfully completed its transition to the verification consensus mechanism, popularly known as the “merge,” the price of ether dropped on Thursday.

Ether was last down 5.6% to $1,501.88, after sliding as low as $1,459.00 earlier, according to Coin Metrics. Traders had anticipated a drop in price after the switchover late on Wednesday night.

The merger has already been priced in major part, according to Anto Paroian, CEO of cryptocurrency hedge fund ARK36. “Since its June lows, Ethereum has already increased by more than 100%. Therefore, it seems likely that the upswing may not be sustained if the Merge proves to have an impact on Ethereum’s price behavior.

Ether surged to start the second half of the year after falling in value along with other risk assets during the first half, and has subsequently outperformed bitcoin. Compared to bitcoin’s 27% growth, it gained about 70% just in July, according to Coin Metrics. Compared to bitcoin’s loss of about 17%, it dropped by almost 9.3% in August.

According to Paroian, “many investors expect it to be all the news’ type of event, which means that, after the initial surge, we may actually see the price of Ethereum drop within the next few days or weeks. This is especially true given that, like the rest of the cryptocurrency markets, ETH is still heavily influenced by the dismal macroeconomic outlook.

Investors have been praising Ethereum’s anticipated technological upgrade for months because it will allow ether to become a yield-generating asset and strengthen network security while using less energy. It has been hailed as one of the pivotal milestones in the brief history of crypto.

A common trade that many in the cryptocurrency industry have been keeping an eye on involves investors buying spot ether then shorting ether perpetual contracts in order to obtain free tokens of the “forked” version of Ethereum without being exposed to the ether price. According to some observers, that trading should end following the merger.

According to Jason Lau, the chief operating officer of Okcoin, “Now that the merge had happened, traders and funds are placing themselves out of it, and that transaction is kind of gone.”

In contrast, he continued, “asset managers and holders are genuinely putting themselves in front of a longer-term game.” “The Ethereum merging is really just the first step in a lengthy sequence of improvements that will increase the network’s scalability and performance.”

The market is still primarily macro-driven, though. For the majority of the morning, the price of ether was largely unchanged, but it began to decline along with stocks, especially the Nasdaq Composite, which fell 1.4%. The decline in Bitcoin’s correlation with stocks, which reached a record high this year, was less than 1%.

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