What happened
Have you ever heard "buy the rumor, sell the news"? That's what investors are taking to heart today in cryptocurrencies.
The news today was The Merge finalizing early this morning on the Ethereum (ETH -0.30%) blockchain. That's great for the blockchain's energy usage, but it hasn't helped its value, which has fallen 5.9% in the last 24 hours as of 2:45 p.m. ET.
So what
The value of Ethereum fell below $1,000 in mid June, which was when rumors that The Merge was imminent started to spread. Speculation around The Merge pushed the value of Ethereum higher and now speculators may be jumping ship.
What many people may not know is that moving to proof of work isn't going to have much of an impact on Ethereum's performance as a blockchain. Transactions won't get cheaper or faster and there's no significant improvement in functionality. The biggest change is an over 99% reduction in energy consumption.
Now what
It's not surprising to see Ethereum's value falling today. Investors who were betting on The Merge are likely exiting. What will be more important long-term are coming upgrades that will increase transactions per second and lower costs dramatically. That will help the blockchain scale, but it's also not clear when those upgrades will take place.
I wouldn't be surprised to see Ethereum continue to slide after this upgrade given there's nothing to speculate over. But watch the yield stakers are generating on the blockchain because that could be a value driver if transactions continue to be popular on Ethereum.
