Ether is on track to post its worst week since mid-June, after the long-awaited Ethereum consolidation turned out to be the exact sell-in event many foresaw. Following the initial market reaction to the event, the price of the second-largest crypto asset by market capitalization fell on Thursday and is now down 15% for the week. The cryptocurrency slipped despite the Ethereum network successfully completing what has been hailed as a monumental technological upgrade that will have lasting effects for the crypto industry at large. “From a purely technological perspective, it is hard to overstate a technical feat that Merge demonstrated,” said Anto Paroian, CEO of crypto hedge fund ARK36. “It’s more or less like building a new engine for a car that’s running at full speed and then moving the engine without the car ever stopping or slowing down. That it is coordinated by a global network of developers who are not managed by any central organization is already an achievement of the core ideals of the crypto space. Meanwhile, the so-called “forked” version of Ethereum – the one that many Ethereum miners know about the proof of work is expected to soon find a new home – has seen the price of it declines. ETHPoW (as Ethereum’s proof of work) fell from around $21 on Thursday afternoon to around $9 on Friday, according to CoinMarketCap. What Happened After Consolidation On Thursday, the funding rate for ether futures contracts also fell to near all-time lows as many traders bet that the price would fall after the consolidation to Take advantage of arbitrage trading. The funding rate represents the sentiment of traders in the perpetual swap market. A negative funding rate indicates that short traders are dominating. Many people bought spot ether and shorted ether perpetual futures, in order to receive tokens of a “forked” version of Ethereum for free without risking the price of ether. Some analysts said they expect trade to decline after consolidation. “ETH funding rates are starting to normalize back to pre-consolidation levels following the distortion after users short ETHperps and hold spot ETH to qualify for the ETHPoW airdrop,” Citi said in a statement. note on Friday. “The futures contract base has now started to normalize… because ETH holders will be eligible for the airdrop at the time of consolidation, meaning there is no longer any incentive to hold ETH for an airdrop. post-merge.” What happens next No one is disappointed in the outcome of the merger – Ethereum is now 99.95% more energy efficient than it was before the transition, ether is now a profit generating asset and issuance it has dropped 90%. These benefits alone will make the network more attractive to institutional investors who have been watching from the sidelines. However, it has now become an event of the past. The effects of consolidation may take a long time to feel and above all, macro dynamics are still holding the market. This week, investors pored over inflation data that was hotter than expected. Now they are holding their breath for next week’s Federal Reserve meeting. “Unfortunately, we are still stuck on this and don’t really have that catalyst to separate the crypto market from the macro trends,” said Jason Lau, managing director at Okcoin. on CNBC’s “Crypto World”. “The merger could be one of these events. However, we haven’t seen it happen yet. The merge doesn’t actually do much for the ether at this stage – it’s really the first step in a series of upgrades. Needham’s John Todaro added to that point, saying that while the results of the fusion are “obvious,” it could take at least six months to see them in the wild. “Consolidation changes will likely take 6+ months to really have an impact on the ecosystem,” he said. “The consolidation paves the way for future technology upgrades that will deliver enhanced scalability … but this is still months if not years.” Some are also starting to worry that ether’s new profit-making opportunities might make it look like a security in the eyes of regulators. On Thursday, Securities and Exchange Commission Chairman Gary Gensler said that staking coins could pass an important test of whether investors expect to make a profit from the job. third-party or not, The Wall Street Journal reported. The Howey test, as it is known, is used frequently to determine if an asset is a security. Lau said that despite Ethereum’s massive success in terms of the environment, that’s only a small part of what’s on cautious investors’ minds. “Organizations that are still on the sidelines are still being set up and ready to dip their toes in. They don’t see consolidation as that trigger point, mainly because a lot of the blockers are not crypto related.” . he say. “It’s really about their own compliance procedures, their own legal teams being comfortable with their counterparts, for example, understanding the types of regulatory risks that may exist.”