The news of the sanction of the OFAC against Tornado Cash raised concerns about censorship and centralization. However, there might be other reasons for the drop of ETH, as it accumulated double-digit gains in the previous weeks.
The price of Ether (ETH), the Ethereum native cryptocurrency, has reached above USD 2,000 for the first time since May. The primary reason is the news of its upcoming migration to a proof-of-stake (PoS) mechanism.
Some players in the industry have predicted that the transition between Proof of Work (PoW) and PoS might affect the network positively.
Over the last four months, increasing Ethereum Name Service (ENS) registrations has led many to view it as higher demand for Ether.
The Effects of the OFAC Sanction against Tornado Cash
The news of the US Office of Foreign Assets Control (OFAC) sanctions against Tornado Cash triggered the recent decline. That situation raised concerns about censorship and centralization in the cryptocurrency community.
Some players in the industry have pointed out that 66% of validators on the network could meet these requests.
However, Brian Armstrong, the CEO of Coinbase, said the company would stop its staking services if regulators required censoring transactions.
However, this might not be the only reason behind the drop in the price of Ether over the last seven days. That is evident as the cryptocurrency accumulated double-digit gains in the previous weeks.
Bitcoin, Ether, and other Cryptocurrencies Lose Gains
The capitalization of the overall crypto market has dropped over the past seven days. For example, Bitcoin has lost about 13% of its value over the last week, according to CoinGecko.
Polkadot (DOT), Solana (SOL), Cardano (ADA), Ethereum Classic (ETC), Avalanche (AVAX), and Polygon (MATIC) also dropped by double digits in the same period.
However, the capitalization of the overall crypto market has shown recovery signs over the last 24 hours, increasing by 0.3%. Meanwhile, the daily trading volume reached above USD 76 billion.
However, Ethereum has yet to recover fully. It is currently trading at USD 1,587, a drop in value of almost 2% in the last 24 hours.
Ether is trading at around USD 1,567 and has accumulated a 3.6% loss over the last 24 hours. While its daily trading volume is above USD 14.64 billion, its market capitalization is about USD 188.48 billion, according to CoinGecko.
The upcoming Ethereum Merge has raised euphoria among many cryptocurrency community members. However, other factors have influenced the price of ETH to the downside over the last week. It is a matter of time before the behavior of the market allows predicting where it will head next.
By Alexander Salazar
