Ethereum is nearing the end of its “Merge” to Proof-of-Stake, but traders are selling ETH in response to reports of significant inflation in the United States.
Tuesday’s release of the latest Consumer Price Index data revealed that U.S. inflation moderated to 8.3% in August. The price of items increased by 0.1% month-over-month. Although the statistics indicated that inflation had declined from July’s 8.5% reading, it exceeded forecasts by 40 basis points.
Immediately after the release of the data, stock futures and cryptocurrencies, including ETH, fell sharply, with ETH falling 8.7%.
ETH demonstrated strength over the summer prior to the Merge. After Three Arrows Capital’s liquidity crisis incident in June, the second-ranked cryptocurrency fell below $900 for the first price in 18 months.
However, the price increased by more than 100% between July and August, momentarily surpassing $2,000 on August 15. The spike was fueled by plans for a Proof-of-Work fork of Ethereum, nicknamed EthereumPOW; it is expected that ETH holders would get an airdrop of the forked coins when the network opens.
ETH now faces the possibility of a “sell the news” scenario after its good day, as risk-on assets suffer as the 8.3% inflation statistic dominates headlines.