What happened

Today's price action in the world of cryptocurrencies has once again reflected the bearish sentiment of a broad swath of growth investors. As of 10 a.m. ET, Ethereum (ETH 2.38%), Ethereum Classic (ETC 3.99%), and Ravencoin (RVN 6.99%) plunged 6.7%, 10.5%, and 7.9%, respectively, over the past 24 hours. This move follows last week's completion of Ethereum's The Merge, posing a critical question to investors with respect to whether this major upgrade as a "buy the rumor, sell the news" event. 

For Ethereum, this thesis may make sense. After all, Ethereum did more than double from June's low to August's high (approximately around the time we got confirmation that Ethereum's The Merge would take place in September). However, since then, this token has declined from slightly more than $2,000 per token to around $1,350 at the time of writing. 

For Ethereum Classic and Ravencoin, two proof-of-work networks that still require "miners" to solve complex mathematical problems in order to validate transactions and secure these blockchains, expectations that Ethereum miners would shift to these networks, resulting in better security and greater awareness, also led to surging token prices. That said, in recent days, these two proof-of-work tokens have given up most of their August gains, as investors appear to be selling indiscriminately right now.

So what

Much of today's bearish sentiment across the board in the world of crypto appears to be tied to surging bond yields. The yield on the U.S. 10-year Treasury broke the 3.5% level, reaching its highest yield since 2011. Generally speaking, all risk assets will see some sort of valuation compression in a higher-interest rate environment. And given how closely correlated cryptos and stocks have been of late (particularly high-growth tech stocks), today's price action may be expected.

That said, these three tokens have greatly outpaced the downside move seen in aggregate. The entire crypto sector is down 3.9% over the past 24 hours, highlighting just how vicious the downside moves in these cryptocurrencies has been of late. 

Some of the negative sentiment that's been building around Ethereum appears to be tied to higher-than expected centralization within proof-of-stake nodes on the more energy-efficient blockchain. Recent reports suggest that two addresses ran more than 45% of all Ethereum nodes following The Merge. Additionally, it appears more than 52% of all Ethereum nodes are run on Amazon Web Services, raising concerns around how Ethereum can retain its security if this centralization continues.

Now what

This year, investors have done well to "sell the rips" rather than "buy the dips," as most bear market bounces appear to be meeting new lows. While we're still quite a bit away from June's lows, it's clear the market may try to retest these lows before this gruesome bear market ceases. 

Interestingly, both Ethereum and tokens many viewed as a hedge against downside risk with Ethereum's The Merge are falling in unison today. Whether this is a result of pervasive bearish sentiment or broader issues around centralization in general in the crypto world is unclear. That said, when investors are selling first and asking questions later, it's difficult to build a constructive thesis right now.