Ethereum plunges after big upgrade

Ether led digital assets lower after a groundbreaking software upgrade of the token’s underlying network turned into what some market observers labeled a “sell-the-news” event.

The second-largest token dropped as much as 3% on Friday and was trading around $1,475 as of 8:33 a.m. in Tokyo following a more than 6% slide Thursday.

Ether is paring a rally since mid-June sparked in part by optimism about the Ethereum update — the Merge — to slash the network’s energy use.”

“Now the excitement around the Merge is done, and we don’t have a catalyst for Ethereum in the short term,” said Martha Reyes, head of research at BeQuant, crypto exchange and prime broker.

“It would be natural to expect a bit of rotation back” into Bitcoin, Reyes added.

Bitcoin dropped about 1% and was trading below $20,000. Smaller coins such as Cardano, Polygon and Solana were also under some pressure.

Ethereum’s revamp makes it vastly more energy efficient and paves the way for it to scale up and become quicker, the network’s developers have said.

The move to a so-called proof-of-stake approach from proof-of-work was years in the making and seems to have gone smoothly, though hiccups remain possible.

“The Merge event definitely was a success,” Preston Van Loon, co-founder Prysmatic Labs and an Ethereum developer, said on Bloomberg Television.

“What we will see over time is, do the metrics hold up? The switch to proof-of-stake has really unlocked the next stages of upgrades.”

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