by Ambar Warrick
Investing.com – Ethereum led a drop in crypto markets on Friday after its highly anticipated turnaround to proof of stake was successfully implemented, while headwinds from a stronger dollar and expectations of rising US interest rates also weighed.
The world fell 10% to $1,474.29, its lowest level this month. The losses saw all the gains it made in the lead-up to its launch away from the proof-of-work, which it called consolidation, fade away.
The merger went into effect on Thursday and has not yet encountered any hitches.
The move sees Ethereum leave mining behind in favor of staking, and significantly reduces the energy costs of the blockchain that bears its name. It is also expected that the blockchain will eventually help improve its scale and speeds.
But the shift to Proof of Stake has also raised concerns about the security of Ethereum, and drawn criticism from some members of the crypto community who attribute the Proof-of-Work tokens to mining.
Ethereum’s losses also came as ETHPoW, a hard fork of Ethereum backed by miners, fell ahead of its official launch.
The broader cryptocurrency markets fell after strong US economic data indicated that they likely have enough leeway to raise interest rates sharply this year.
It fell 2.5% to below $20,000 again, while the total cryptocurrency market cap fell well below the $1 trillion mark.
Rising interest rates in the US have been the biggest factor behind cryptocurrency losses this year, as the space lost nearly two-thirds of market capitalization as the Federal Reserve began raising interest rates.
The interest rate hike came as a shock to investors who have enjoyed nearly two years of ultra-loose monetary policy, which has created enough liquidity to fuel the impressive rally of cryptocurrencies in 2021.
But with the risks of a global recession steadily increasing, a repeat of such a rally may be out of reach in the near future.