The enthusiasm surrounding Ethereum’s merger started to wane on Tuesday as geopolitical tensions drained investor risk appetite.
The most valuable cryptocurrency, bitcoin (BTC), was trading at $22,870 at 7:00 UTC, down 1.8 per cent over the previous day. Ethereum’s ether (ETH) suffered a 5% loss to $1,586 while FIL, EOS, and ICP all had at least a 10% decline. At $1.09 trillion, the entire market capitalization was down 3%.
Nancy Pelosi, the speaker of the United States House of Representatives, was expected to arrive at Taipei Songshan Airport on Tuesday at 10:20 p.m. local time, according to Taiwanese local media (14:20 UTC). If she insists on going, there will be serious repercussions, the spokesperson for the Chinese foreign ministry Zhao Lijian said.
“We are fully prepared for any eventuality. The People’s Liberation Army [PLA] will never sit by idly. China will take strong and resolute measures to safeguard its sovereignty and territorial integrity.”
With Nancy Pelosi’s visit to Taiwan, Markus Thielen, chief investment officer at British Virgin Islands-based IDEG Asset Management (IDEG), warned in an email that “we might see [ether] plummeting to] $1,500 today.”
Geopolitical tensions are unpredictable and frequently cause risk assets to react emotionally. Even while markets were down, losses were manageable, possibly due to the perception that central banks would scale back or stop tightening if geopolitical tensions increased.
Thielen identified another trigger for the anticipated decline in ether’s price and the general market— which is the waning excitement surrounding the Ethereum merger. It is anticipated that Merge, the purportedly bullish update, will occur in September and involve the union of Ethereum’s existing proof-of-work blockchain with the Beacon Chain, a proof-of-stake blockchain.
After Ethereum developer Time Beiko on July 14 announced September as a possible date, Ethereum saw a strong bid, pushing the beaten cryptocurrency market higher.