Ethereum Rallies Past $1,600 Despite 40-Year Inflation High
Ether is up 40% over the past week after news broke that ethereum's move to proof of stake is tentatively slated for Sept. 19.
It's not a new all-time high, but any good news is something to covet in crypto winter. Ether, the second biggest cryptocurrency by market cap, is up around 40% in the past seven days, exceeding $1,600 on Monday. That's far from the crypto's $4,800 high last November, but it's the first time ether has passed that benchmark since June 13.
Ether has been hit particularly hard by the recession fears that have gripped the global economy. As of last week, prior to ether's rally, the cryptocurrency had lost around 70% of its market cap since the year began. It hit its nadir on June 19, according to CoinMarketCap, briefly sliding to $993. Since ether forms the basis of the nonfungible token market, NFT values have plummeted with over the past month too.
At the time of writing, ether's value of $1,608 is up 34% compared with its value five days ago. The hike is especially significant for following news that June saw an inflation rate of 9.1% compared with last year, the highest level of inflation since November 1981. The precipitous fall in crypto value has been caused by rises in interest rates, executed by a Federal Reserve anxious to tackle inflation. With the cost of money going up, investors have fled from speculative assets; crypto has been hit hard, but so have tech stocks.
Crypto investors are hoping that ether's rally in the face of such alarming inflation is a sign that we've already seen the coldest days of crypto winter. Bitcoin is up over 10% over the past few days, sitting at $22,300 at the time of writing.
Ether's more pronounced bounce is being attributed to news that the Ethereum Merge, which will see the blockchain become nearly carbon neutral, is tentatively scheduled to be executed on Sept. 19. That date was penciled in during a recent conference call among ethereum developers, though it was noted that the date is subject to change.
The Ethereum Merge will see the blockchain transition from its current proof-of-work system to proof of stake. What does that crypto mumbo-jumbo mean? The short story is that the solving of cryptographic puzzles, which is the part that guzzles electricity, will no longer be part of the blockchain mining process. As a result, it's estimated that ethereum will see its carbon footprint drop by 99.65%. You can find a full explanation of the Ethereum Merge here.
Ethereum's transition to proof of stake has been in the works since before the blockchain was even created, and has been delayed many times. That developers are confident enough to for the first time lock in a specific date -- Sept. 19 -- rather than wider time periods like "sometime in 2022" has evidently got investors excited.