{"id":332563,"date":"2022-06-14T07:20:44","date_gmt":"2022-06-14T11:20:44","guid":{"rendered":"https:\/\/insidebitcoins.com\/?p=332563"},"modified":"2022-06-14T07:21:03","modified_gmt":"2022-06-14T11:21:03","slug":"ethereum-aggressive-drop-has-the-crypto-crowd-and-the-market-in-shambles","status":"publish","type":"post","link":"https:\/\/insidebitcoins.com\/news\/ethereum-aggressive-drop-has-the-crypto-crowd-and-the-market-in-shambles","title":{"rendered":"Ethereum Aggressive Drop has the Crypto Crowd, and the market, in Shambles"},"content":{"rendered":"

Ethereum Aggressive Drop has given rise to a snowball effect, affecting many cryptocurrencies and exchanges.\u00a0<\/strong><\/p>\n

After Bitcoin, Ethereum gave people hope to retain their positions as exclusive money makers and rule the crypto world. However, the crypto market started to show bearish tendencies at the beginning of the year, and so far, it hasn’t let up.<\/p>\n

These shortfalls have made us witness new lows for Ethereum. When people thought that ETH value dropping to $1900 would signal the arrival of crypto winter, we say the token falling down to $1700. When the crypto crowd started to worry that the value would face another drop to $1500, we saw the price go to $1400.<\/p>\n

Ethereum Price is now hovering above $1200. And from what experts say, we should prepare to welcome the dreaded $1000 mark.<\/p>\n

The situation is dire, and the community has grown so desperate that it has finally asked \u2013 Is Ethereum becoming the Next LUNA?<\/strong><\/p>\n

It won’t be an understatement to say that the crypto crowd isn’t worried about the current circumstances. The underlying issue is that most information about the recent mishaps at Ethereum is fragmented. This article attempts to weave all the facts together so you can get a clearer picture of what is happening.<\/p>\n

What is stETH?<\/strong><\/h2>\n

In December 2020, LIDO Finance was launched. It is the Decentralized Finance Platform and the largest provider of staking services on Ethereum. Simply put, it is a way for Ethereum owners to stake their Ethereum and earn passive income.<\/p>\n

It featured a staking pool with a tokenized version of staked ETH. When an investor stakes 1 ETH, LIDO gives the investor one staked ETH or stETH. It is an Ethereum derivative token that you stake on the LIDO blockchain.<\/p>\n

For the longest time, the crowd has believed that stETH must maintain a 1:1 peg with Ethereum.<\/p>\n

LIDO became popular because there was no concrete date for the Merge launch (which it still isn’t).<\/p>\n

For most of its life, stETH has stayed “pegged” to Ethereum. We are emphasizing this term because stETH isn\u2019t pegged to Ethereum. That means it doesn\u2019t have to have its value equal to Ethereum.<\/p>\n

It is a piece of information that has always been out in the open, but most of the crypto crowd has ignored it.<\/p>\n

\u00a0Point to Understand: <\/em><\/strong>Staked ETH is not a Stablecoin. It is a staked derivative that \u201cat most” must be equal to the value of ETH but not go beyond it. <\/em><\/p>\n

Ethereum Status during the Bull and the Bear phase<\/strong><\/h2>\n

Let us now understand the impact of bull and bear market sentiments on Ethereum.<\/p>\n

Naturally, the demand for Ethereum during a bear market is high. And those wanting to earn extra ETH in the form of passive income are willing to buy a handful of stakes ETH as well. This way, they get to make gains trading and earn some passive gains staking.<\/p>\n

We are not in the bull phase at the moment; it is the bearish phase we are dealing with. And it is all thanks to the Terra crash.<\/p>\n

It is when cryptocurrency as ironclad as ETH is experiencing an aggressive drop. People are afraid and are willing to give away their long-term gains from staking Ether to exit quickly and safely.<\/p>\n

The Merge is no longer Merged with People’s Trust<\/strong><\/h2>\n

According to developer Tim Beiko, the Ropsten Testnet merge was successful. However, the successful dry run wasn\u2019t without its issues. Investors who observed the run witnessed that the test run was full of bugs. It led to the community fearing that developers would delay the Merge, and they did.<\/p>\n

After finding the bugs, the Ethereum decided to push the difficulty bomb<\/strong> by 2.5 months.<\/p>\n

The difficulty bomb is a way to migrate PoW miners to get comfy with proof of stake. The idea was to make mining blocks more difficult. If they had let this bomb explode without taking care of the bugs, Ethereum would have become useless within a few weeks.<\/em><\/p>\n

Having their fears realized, investors started piling on the selling pressure, causing the Ethereum price to implode.<\/p>\n

The delay of Merge caused liquidation concerns in DeFi Protocols like Lido Finance and Aave, which further aggravated the stETH sell-off, compounding the price drop further.<\/p>\n

Celsius suffers stETH depegging<\/strong><\/h2>\n

As soon as stETH depegged, news started to float around that Celsius, one of its largest holders would soon face liquidity issues.<\/p>\n

The world\u2019s loudest purveyor of \u201cunbanking yourself” suffered many DeFi hacks last year and was forced to pull out nearly $500 million from the Anchor Protocol because of the LUNA crash.<\/p>\n

These issues compelled customers to start withdrawing money from Celsius quickly. Celsius couldn\u2019t manage these increased requests and then froze withdrawal.<\/p>\n

And the worst part about it is that it took a lot of time to inform the community that it had to freeze withdrawing at the moment.<\/p>\n

stETH shortfalls aren\u2019t the only issues to blame here, as the price of CEL \u2013 the reward token of Celsius \u2013 one that the network used to offset the risks that come with staked crypto, has also dived.<\/p>\n

The Loss of Ethereum has had a snowball effect<\/strong><\/h2>\n

Ethereum implosion has caused a chain reaction \u2013 leading to the loss of many altcoin prices to drop as well. For instance, since Ethereum started to trade in the red, Apecoin has followed a shortfall trend. Currently, it is down 2.92% in the last 24 hours.<\/p>\n

Ethereum has dropped in price rapidly, and the crowd is afraid. But should they be? It is a question for the experts. Those bullish still believe that this year’s crypto winter will be over soon. On the other hand, the bear watchers say that the worse is yet to arrive.<\/p>\n

For now, we recommend closely watching the market and staying updated on the news with IB.<\/p>\n

Read More<\/h2>\n
    \n
  1. Celsius pauses withdrawals amid extreme market conditions<\/a><\/li>\n
  2. Which coin to buy and sell during the crypto crash?<\/a><\/li>\n<\/ol>\n\n \n

     <\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

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