The second-largest cryptocurrency prices went below $2K as US Inflation is surfing ahead and breaking all records.
Ethereum (ETH) prices have hit a new low as US inflation has made their impact felt and have broken records in their wake. The positive correlation was visible on July 13th when the New York bell exchange opening bell proceeded and noticed a sudden collapse of ether prices falling below $2K. The plunge was apparent and had made ethereum fall back in pricing.
Bitcoin (BTC) has also crashed reaching a standard value of $32,500 along with ether. The cause of this sudden slip of prices is anticipated to be the inflation that is currently experienced by the US economy and has been heralded as one of the worst episodes of inflation ever to be experienced by the nation after 1991.
Ethereum Plunges to New Low
As the prices were hit by viable inflation, the ETH-USD rates have suffered and have shown a downward trend in pricing as low as $1961.10 with a visible fall of 3.43%.
The US Consumer Price Index noticed its worst episode of inflation after 1991 as the index was hit by 0.9% in June and has reached 5.4% over the year since 1991. As a result, the traders were seen in a frenzy and were looking for ways to sell their cryptocurrencies in fear that the inflation might make the US Federal Reserves withdraw its quantitative easing policies.
The Federal Reserve meeting minutes have revealed in their June meeting to be in favor of at least two rate hikes by the end of 2023, only if the inflation rate is running above 2%. The central banks have been maintaining interest rates below 0.25% which have resulted in fragile investor dollar demand and have boosted the safe-haven assets including Bitcoin.
Ethereum network, however, has experienced a technical block and the visible causes that might have contributed to the new low prices can be attributed to overloaded blockchain miners that have raised their fees, in certain cases, users have also paid higher gas fees than the actual amount that was documented in the transfer.
Ether prices have been correlated with Bitcoin and often affect the prices of both currencies. The correlation factor has been kept at 0.64% efficiency and ether prices have acquired a downward graph in mid-May and are expected to rise later this year as the crypto variant displays a resilient stance to such bearish falls
However, the protocols to tackle such inefficiencies have been taken up to a discussion, where Ethereum intends to switch off its policy of miner friendly and convert it into an energy-intensive proof of work policy to initiate progressive work execution. London Hard Fork has been working consistently to battle such issues and has taken up five improvement proposals for the same.
The new proposal includes a suggestion to burn a portion of the fee collected via ETH to alleviate pressure on cryptocurrency and also proposes to replace miners as validators. Once through, ETH will require each validator to lock at least 32 ETH to run its network efficiently.
This new recommendation can also make ethereum appear as scarce in demand helping the currency seek momentum and stability like Bitcoin.