Ethereum prices plunged to a two-month low on Monday as losses after the blockchain’s move to proof of stake continued, while the broader crypto market weakened ahead of a Federal Reserve meeting this week.
The world’s second-largest crypto-currency fell 10% to $1,303 – its lowest level since mid-July. The token has now lost nearly a quarter of its value since the switch to proof-of-stake (PoS), dubbed the “merger,” went into effect last week.
While the switch has significantly reduced Ethereum’s power consumption, it has also been criticized for making the blockchain less decentralized, as well as for setting the high buy-in amount for winning staking rewards at 32 Ethereum.
Ethereum’s recent losses have now wiped out any gains made in the pre-merger period, as the token has largely underperformed the broader crypto market.
Bitcoin, by comparison, is down just over 6% in the past week.
But concerns about rising U.S. interest rates further weighed on the crypto-currency market Monday. Bitcoin, the world’s largest token, fell 6 percent to $18,811, while the total capitalization of the crypto-currency market fell to $910 billion, according to data from CoinMarketCap.
Most risk assets plunged for the day ahead of a widely expected 75 basis point bps hike by the Fed on Wednesday. Traders are also considering the possibility of a 100 basis point hike.
This will take U.S. rates to their highest level since the 2008 financial crisis, which is expected to weigh heavily on speculative assets such as stocks and crypto.
Crypto has been particularly hard hit by rising interest rates this year, as much of the asset class’ stellar rally over the past two weeks has been driven by ultra-loose monetary policy. Total market capitalization is down more than $2 trillion from last week’s highs, and no respite is in sight.