Ethereum (ETH) price is set to be deflationary after the Merge due to the EIP-1559 burning mechanism. However, the ETH price continues to dive below $1500 even before the Merge. The pressure is due to whales selling their ETH holdings, Fed Chair Jerome Powell’s rate hikes cues, and almost $2 billion in options expiry on September 30.
Ethereum (ETH) Price Plunges Below $1500 Before the Merge
Ethereum will become a deflationary cryptocurrency after the Merge, with expectations of a 90% reduction in ETH issuance.
According to data by on-chain platform OKLink, over 2.6 million ETH have been burned since the implementation of the EIP-1559 in August last year. The total ETH burned until now is worth over $8.5 billion. Also, the annual inflation rate of Ethereum has fallen 50.77% since the implementation of EIP-1559.
Moreover, whales are selling their ETH holdings on expectations of the deflationary nature of Ethereum post-Merge. The non-exchange whales seem to be selling their Ethereum (ETH) holdings, whereas the ETH supply held by exchanges has increased in August. This means whales are bearish on the Ethereum (ETH) price after the Merge.
In fact, the deflationary Ethereum price post-Merge and $2 billion in options expiry on September 30 are pushing whales and traders to sell their ETH holdings.
On August 26, the crypto market saw two important events — the monthly options expiry and Fed Chair Jerome Powell’s hawkish Jackson Hole speech. As expected, Powell reaffirmed the Fed’s hawkish stance regarding rate hikes in the coming months. However, the monthly expiry was the primary reason behind the market-wide sell-off.
Ethereum saw $1.27 billion in options expiry on August 26. The price tumbled below the $1600 level, causing the liquidation of traders. Now, the next ETH options expiry is likely to record more liquidations as $2 billion is set to expire post-Merge. Also, the price is already below the max pain price of $1600.
ETH Price Risks Falling to $1000
The Ethereum (ETH) price is witnessing massive selling pressure below the $1600 level. The price has tumbled over 3% in the last 24 hours and over 7 % in the last 7 days. Currently, the price is trading near the $1450 level.
The Ethereum Merge is most likely to happen on September 15. The Ethereum network needs an average hash rate of 872.2 TH/s to achieve the TTD of 58750000000000000000000 on September 15. According to OKLink’s “Ethereum The Merge Countdown” data, the current hash rate is 876 TH/s.
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