Ethereum (ETH) price drops 5% on stability doubts as its POS merge approaches
Ethereum (ETH) price has experienced a sharp drop as stability doubts immerge as Ethereum blockchain proof-of-stake (PoS) merge approaches.
At the time of writing, ETH was trading at $1,853.44, down 5.78% after pulling back from a daily high of $1,976.57.
The Ethereum Beacon chain that was to introduce PoS into the blockchain went through a 7-block deep reorganization in the past 24 hours.
Block reorganization happens when there is an inconsistency in the order of blocks which mainly happens as a result of malicious activities or a bug.
The block reorganization in the Ethereum was a result of a bug that showed that the Ethereum shift to PoS might not be stable as advocated by Vitalik Buterin, the Ethereum co-founder.
Ethereum stability doubt
Although the recent reorganization was limited, the Ethereum developers are still trying to establish the cause, so far, they confirmed that the blockchain was not attacked.
Gnosis founder, Martin Koppelmann, noted that Buterin might have been too optimistic that the reorganization stability will improve if Ethereum will shift to PoS.
‘’We have not seen 7 block reorgs on Ethereum mainnet in years.’’
However, he complimented the Ethereum community for acting so fast on finding the cause and the solution to this issue.
Besides, the blockchain shift PoS is anticipated to happen this year in order to increase blockchain accessibility. Buterin expects the shift to take place by August 2022.
The future of Ethereum markets
With the expiry of some option contracts happening this week, the Ethereum futures market seems to be on shaky ground.
In the last 12 hours, the token has experienced a sizeable amount of liquidations, about $118 million which is twice that of Bitcoin. Almost 97% of these were long positions which shows that traders were ready for the Ethereum recovery.
However, the expected recovery has not yet happened since ETH has been lagging in the crypto market. Its losses were sparked after the Federal Reserve meeting that showed that some Central bank officials suggested further interest rate hikes this year