Ethereum (ETH) is trading for $1.4k following news that ETH core developers are delaying the "difficulty bomb" for 2 to 4 months, pushing back The Merge. The Merge delay, combined with bad US inflation numbers and a weak crypto market, has driven the price of ETH below $1.7k for the first time since July 2021.
The Ethereum "Merge" is the blockchain's switch from Proof of Work to Proof of Stake consensus. The Ethereum "difficulty bomb" is code intended to force ETH miners to switch from Proof of Work to Proof of Stake. Once enabled, the code increases the difficulty of Proof of Work mining exponentially until mining ETH is impossible. At this point, everyone would have to switch to Ethereum's Proof of Stake network.
If the difficulty bomb is delayed, then the Ethereum Merge is also delayed. Earlier this week, the crypto community celebrated a major Merge milestone when Ethereum testnet Ropsten successfully transitioned to Proof of Stake.
The Merge is likely delayed beyond Ethereum's most recent target release month, August 2022, but crypto gamblers are still confident that The Merge will happen this year. Before the difficulty bomb delay, Polymarket gamblers were 90% confident The Merge would happen in 2022. Now they're at 89% confidence.
Before Ethereum delayed the difficulty bomb, ETH was trading around $1.7k; now it's worth $1.5k–a drop of 17% in less than 24 hours. Over $200M in Ethereum positions were liquidated as ETH dipped below $1.6k, and Lido's stETH briefly depegged when ETH started to slide.