Why Did ETH Drop After the Merge? Here’s the Real Reason

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The cryptocurrency market took a bearish turn last week — and surprisingly, even the much-anticipated Ethereum Merge on September 15, 2022, failed to spark a recovery. Despite widespread optimism that the transition to proof-of-stake (PoS) would propel ETH prices upward, the opposite occurred. In fact, Ethereum (ETH) dropped sharply by 8.73% to $1,472.80 within 24 hours post-Merge.

Bitcoin wasn’t spared either, falling 1.80% to $19,774.36, while major altcoins like BNB, XRP, Solana (SOL), and Dogecoin (DOGE) also remained deep in the red. This raises a critical question: Why did ETH fall after the Merge?

Let’s break down the real factors behind this unexpected downturn.

The “Buy the Rumor, Sell the News” Effect

One of the most cited explanations comes from on-chain analytics firm Glassnode, which reported significant outflows from exchanges leading up to the Merge. This suggested that many investors had already positioned themselves ahead of the event, anticipating a price surge.

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When the Merge finally occurred, some traders took profits — a classic case of “buy the rumor, sell the news.” This profit-taking created downward pressure on ETH as holders cashed out their gains.

Moreover, data shows that speculative short positions had been building since July 2022. According to QCP Capital, a Singapore-based trading firm, many traders expected volatility and positioned themselves for a post-Merge dip. Their bearish bets paid off — further accelerating the sell-off.

Miner Frustration and the Rise of ETHW

Another key factor was the forking of Ethereum into Ethereum Proof-of-Work (ETHW). The Merge marked the end of mining on the Ethereum network, directly impacting thousands of miners who relied on computational power to earn rewards.

Unwilling to abandon their hardware investments, a faction of miners pushed forward with ETHW, preserving the old proof-of-work consensus. While ETHW has limited adoption, its existence introduced uncertainty in the market.

Investors began questioning:

This uncertainty weighed on sentiment. Even though ETHW has since faded into obscurity, the fear of fragmentation contributed to short-term selling pressure on ETH.

Macroeconomic Pressures: The Fed’s Hawkish Stance

While Ethereum-specific factors played a role, broader macroeconomic conditions were arguably more influential.

The U.S. Federal Reserve maintained its aggressive interest rate hikes in 2022 to combat inflation. Higher interest rates make risk-on assets like cryptocurrencies less attractive compared to safer investments like bonds or savings accounts.

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This macro headwind affected not just ETH but the entire crypto ecosystem. In such an environment, even transformative upgrades like the Merge struggle to reverse bearish momentum.

As QCP Capital noted, "Crypto is no longer an isolated market — it reacts strongly to macro signals." With tightening monetary policy and recession fears looming, investors adopted a risk-averse posture.

What Is Ethereum? A Quick Refresher

Before diving deeper, let’s clarify what Ethereum actually is.

Ethereum is more than just a digital currency. While it enables peer-to-peer transactions like Bitcoin, its true innovation lies in being a programmable blockchain — a fully Turing-complete platform where developers can build decentralized applications (DApps).

At the heart of this ecosystem is Ether (ETH), the native token used to:

Since its 2014 token sale, Ethereum has become the foundation for countless blockchain projects — from DeFi platforms like Uniswap to NFT marketplaces like OpenSea.

Its flexibility and robust developer community have cemented its status as the leading smart contract platform.

Key Factors Behind ETH’s Post-Merge Decline

To summarize, several interconnected forces drove ETH’s price drop:

  1. Profit-Taking After Hype: Traders exited long positions post-Merge.
  2. Short Positions Activated: Bearish traders capitalized on expected volatility.
  3. Miner Uncertainty: The ETHW fork created confusion and diluted confidence.
  4. Macro Headwinds: Rising interest rates reduced appetite for speculative assets.
  5. Market-Wide Downturn: Crypto sentiment remained bearish across all major assets.

These elements combined to override any positive sentiment generated by the successful Merge.

Frequently Asked Questions (FAQ)

Why did ETH drop after such a major upgrade?

Even transformative upgrades don’t guarantee price increases. If market expectations are already priced in — or if external factors like macroeconomic trends are negative — prices can fall despite technical success.

Does the Merge affect Ethereum’s long-term value?

Absolutely — but not immediately. The Merge significantly improved Ethereum’s sustainability by reducing energy consumption by ~99.95%. Over time, this enhances its appeal to institutional investors and environmentally conscious users.

Was the ETHW fork successful?

Not really. While ETHW allowed miners to continue using old hardware, it lacks major exchange support, developer activity, and real-world use cases. Most of the ecosystem remains on Ethereum’s proof-of-stake chain.

Can ETH recover from this drop?

Historically, Ethereum has shown resilience. After previous major events — like the 2016 DAO hack or 2020’s Black Thursday crash — ETH eventually rebounded stronger. Long-term fundamentals remain solid.

Is staking ETH safe after the Merge?

Yes. Staking is now central to Ethereum’s security model. Over 20 million ETH are staked (as of 2025), and protocols continue to evolve for better accessibility and liquidity.

How does inflation impact crypto prices?

Higher inflation leads central banks to raise interest rates. This strengthens traditional financial instruments relative to crypto, pulling capital away from digital assets during tight monetary cycles.

Looking Ahead: What’s Next for Ethereum?

While short-term price action disappointed some, the long-term vision remains intact. The Merge was just Phase 1 of Ethereum’s evolution. Future upgrades — including Surge, Verge, Purge, and Splurge — aim to improve scalability, reduce fees, and increase throughput via rollups and sharding.

These developments could reignite investor interest in 2025 and beyond.

👉 Explore how upcoming Ethereum upgrades could shape the future of Web3.

For now, patience is key. Markets often react emotionally in the short term but reward fundamentals over time.

Final Thoughts

The post-Merge ETH price drop wasn’t due to failure — it was due to market mechanics meeting macro reality. Expectations were sky-high, but profit-taking, miner resistance, and global economic pressures created a perfect storm for selling.

Yet, Ethereum’s core strengths — its vibrant ecosystem, developer dominance, and sustainable PoS model — remain stronger than ever.

As history shows, innovation doesn’t always bring instant rewards — but it lays the groundwork for future growth.

Core Keywords: Ethereum Merge, ETH price drop, proof-of-stake, crypto market crash 2022, Ethereum upgrade, ETHW fork, staking Ethereum, macroeconomic impact on crypto