Cryptocurrency Ethereum plunges by 20% after historic transition to PoS

Since the transition of the Ethereum cryptocurrency from the Proof-of-Work (PoW) to the Proof-of-Stake (PoS) consensus algorithm, the network’s capitalization has decreased by almost 20%, from $ 195.89 to $ 159 billion. At the time of writing, ETN is trading at $ 1345, up 3.98% overnight.

In addition to the drop in the value of ETH after The Merge, the cryptocurrency’s founders have faced many unexpected problems. For example, Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), said that after Ethereum switches to PoS, the regulator may start considering ETH as a security. He said that the asset should pass the Howey test, which will determine whether the token is a security.

Immediately after the transition to the green blockchain, the cryptocurrency ethereum fell in value by almost 8%. However, at the time, analysts were convinced that ETH would be able to maintain its position and grow in value. At the moment, the cryptocurrency community is pinning all its hopes on October, which is usually a successful month for the entire cryptocurrency market.

As for The Merge, which took place on September 15, no difficulties were reported during the merger. During the upgrade, the main Ethereum network connected to the Beacon Chain, fully switching the cryptocurrency to the Proof-of-Stake consensus algorithm, a faster, more energy-efficient and secure way to scale projects. The Merge will reduce ETH’s energy consumption by 99% and, according to Vitalik Buterin, will open up new opportunities for developers. After the merger, the entire Ethereum network will consume less energy than YouTube, gold mining, BTC POW, ETH PoW, Netflix, gaming, and PayPal.