Ethereum Liquidations Top $127M Amid Post-Merge Volatility

The successful merge carried out by the Ethereum network this week hasn’t staved off the effects of crypto’s ongoing bear market, with Ethereum’s price down around 8% in the past 24 hours.

Ethereum, the second largest cryptocurrency by market cap, is currently trading hands around $1,460, down 8.2% over the past 24 hours, according to CoinMarketCap.

Over the past seven days, Ethereum shed more than 14% of its value, tumbling from $1,740.88 on Wednesday to as low as $1,448.95 in the early trading hours of Friday. Daily trading volumes were also down 19.11% to $20 billion in the last 24 hours.

This bearish price shift also led to over $127.4 million in Ethereum liquidations, according to data from Coinglass.

More than 80% of these liquidations, over $103 million, were long positions from bullish crypto traders.

Why is Ethereum down following the merge?

The impetus for Ethereum’s recent bearish price action is multi-pronged.

However, perhaps the most significant factor was SEC Chair Gary Gensler’s recent statement that proof-of-stake cryptocurrencies could be considered securities.

The merge saw Ethereum shift from the proof-of-work (PoW) consensus mechanism employed by cryptocurrencies such as Bitcoin, to a proof-of-stake model.

Under the new consensus, Ethereum offers returns to depositors in a process commonly known as “staking.” Gensler argued the native assets of proof-of-stake blockchains could pass the Howey test, a critical test used to determine whether an asset qualifies as an investment contract, and therefore falls under federal security laws.

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Gensler’s comments come amid broader bearish action from the crypto market, sparked by the release of recent CPI figures that point to higher-than-expected inflation. Over the past week, Bitcoin, the biggest cryptocurrency by market capitalization, is down around 4.6%, and is currently trading below the psychologically significant level of $20,000.