Prices for the second-largest cryptocurrency have dropped below $2,000 as US inflation is rising and breaking all records.
Ethereum (ETH) prices take a new low as inflation in the US has taken its toll and broke records in its wake. The positive correlation was visible on July 13, when the New York Stock Exchange’s opening bell started and noticed a sudden collapse in ether prices falling below $2K. The drop was apparent and caused the ethereum to fall back into prices.
Bitcoin (BTC) also crashed, reaching a default value of $32,500 along with ether. The cause of this sudden drop in prices is predicted to be the inflation that is currently experienced by the US economy and was heralded as one of the worst inflation episodes ever experienced by the country after 1991.
Ethereum dives to a new level
Like the prices were hit by viable inflation, the ETH-USD rates suffered and showed a downward trend in prices to US$ 1961.10, with a visible drop of 3.43%.
The US Consumer Price Index noted its worst episode of inflation after 1991, when the index hit 0.9% in June and hit 5.4% over the year since 1991. As a result, traders were spotted. in a frenzy and were looking for ways to sell their cryptocurrencies in fear that inflation would cause the US federal reserves to withdraw their quantitative easing policies.
The Federal Reserve meeting minutes revealed at its June meeting that it was in favor of at least two rate hikes by the end of 2023, only if the inflation rate is above 2%. Central banks have kept interest rates below 0.25%, which has resulted in weak investor demand for dollars and increased safe-haven assets, including Bitcoin.
The Ethereum network, however, has gone through a technical stalemate and the visible causes that may have contributed to the new low prices can be attributed to overburdened blockchain miners who raised their rates, in certain cases users also paid more gas rates. higher than the actual values that were documented in the transfer.
Ether prices have been correlated with Bitcoin and often affect the prices of both currencies. The correlation factor was held at 0.64% efficiency and ether prices acquired a downward chart in mid-May and are expected to rise later this year as the variant exhibits a resilient stance to such bearish drops.
However, the protocols for dealing with such inefficiencies have been brought into a discussion, where Ethereum intends to turn off its policy of friendship with miners and convert it into a proof of energy-intensive work policy to initiate progressive work execution. . London Hard Fork has consistently worked to combat these issues and has accepted five proposals for improvement.
The new proposal includes the suggestion to burn part of the fee charged via ETH to relieve the pressure on the cryptocurrency and also proposes the replacement of miners as validators. After passing, the ETH will require each validator to lock at least 32 ETH to operate its network efficiently.
This new recommendation could also make the ethereum appear in short supply, helping the currency seek momentum and stability like Bitcoin.