Cryptocurrencies aren’t faring well as we hit the second weekend in June. Ethereum has been hit particularly hard in recent hours. Not only has the broader cryptocurrency market seen a sell-off in the wake of the current US inflation report (opens in new tab), but Ethereum developers are also indicating that the merge will be delayed (opens in new tab) again. Ethereum (ETH) carries a valuation of $1,557 at the time of writing, down about 10% on the day and sitting at its lowest ebb for the last 15 months.
So, the cryptocurrency market as a whole is currently feeling some ill effects from Friday’s consumer inflation report published by the US Labor Department. WSJ surveyed economists who had expected the consumer price index (CPI) to rise 8.3% in May, but the government said it increased 8.6% to a 40-year high. As a result, US stocks fell sharply, and crypto behaved as we have become accustomed, by following tech stocks down the pan – but exaggeratedly.
With inflation so high, moneyed individuals tend to move away from the risks of the stock market, and this movement amplifies more speculative investments. Many view cryptocurrencies as highly speculative.
The misery of ETH holders worsened by reports suggesting the merge has been kicked further down the road. On Friday, developers decided to delay the transition of ETH from Proof of Work (PoW) to Proof of Stake (PoS). According to the Bloomberg report, devs found some bugs with PoS on one of the oldest testnets of the network and thus decided to push back the merge.
With the now regular push-backs, uncertainties emerged, raising doubt about things playing out in the way the Ethereum execs and devs have outlined. Ethereum co-founder Vitalik Buterin stated the merge could happen this August if the devs didn’t uncover any significant issues. Though Buterin also mentioned that the merge could be pushed back to September or October. Tim Beiko, who coordinates Ethereum developers, is worried about developer burnout from moving too fast. Beiko estimated that there was a 1 to 10% chance the merge won’t happen at all this year in an interview with Bloomberg.
PC DIYers have a love/hate relationship with ETH and GPU-based crypto mining. On the one hand, it lets those with powerful graphics cards profit from otherwise idle computer time, perhaps helping to pay PC hardware bills. On the other hand, colossal GPU mining operations sprung up, stripping consumer outlets of GPUs and encouraging price gouging and scalpers. 2022 may see the end of this era.