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Ether is on pace to post its worst week since mid-June, after the long-anticipated Ethereum merge turned out to be the exact sell-the-news event so many foresaw. After an initially muted market response to the event, the price of the second largest crypto asset by market cap turned lower Thursday and is now down 15% for the week. The cryptocurrency slid despite the Ethereum network successfully completing what has been hailed as a monumental tech upgrade that will have long-lasting effects for the crypto industry at large. “From a purely technological perspective, it is difficult to overstate how big of an engineering feat the Merge represents,” said Anto Paroian, CEO at the cryptocurrency hedge fund ARK36. “It is more or less like constructing a new engine for a car that is going at full speed and then switching the engines without the car ever stopping or slowing down. That it was orchestrated by a global network of developers who aren’t managed by any central entity is already a triumph of the core ideals of the crypto space.” Meanwhile, the so-called “forked” version of Ethereum – whose launch many anticipated knowing proof-of-work Ethereum miners would soon have to find a new home – saw its price tumble. ETHPoW (as in Ethereum proof-of-work) fell from about $21 Thursday afternoon to about $9 on Friday, according to CoinMarketCap. What happened after the merge On Thursday, ether futures funding rates also fell near all-time lows as many traders bet the price would decline after the merge to take advantage of an arbitrage trade. Funding rates represent traders’ sentiments in the perpetual swaps market. Negative funding rates indicate that short-position traders are dominant. Many have been buying spot ether and shorting ether perpetual futures, in order to get tokens of the “forked” version of Ethereum for free, without the ether price exposure. Some analysts said they expected to see that trade unwind after the merge. “ETH funding rates are beginning to normalize back to pre-merge levels following the distortion after users shorted ETHperps and held spot ETH in order to be eligible for the ETHPoW airdrop,” Citi said in a note Friday. “The futures basis has now begun to normalize… because holders of ETH would be eligible for the airdrop at the point of the merge, meaning there is no longer an incentive to hold ETH for an airdrop post-merge.” What happens next No one is downbeat on the results of the merge – Ethereum is now 99.95% more energy efficient than it was before the transition, ether is now a yield-generating asset, and its issuance has dropped 90%. These benefits alone should make the network more attractive to institutional investors that have been observing from the sideline. However, it’s now an event of the past. The impact of the merge could take a long time to feel and on top of it, macro drivers still have a strong hold on the market. This week, investors digested hotter-than-expected inflation data . Now they’re holding their breath for the Federal Reserve’s meeting next week. “We’re still stuck in this unfortunately, and there really hasn’t been that catalyst to decouple crypto markets from macro trends,” Jason Lau, chief operating officer at Okcoin said on CNBC’s “Crypto World.” “The merge potentially could have been one of these events. However, we haven’t seen it play out either. The merge in practicality doesn’t do much for ether at this stage — it really is a first step in a series of upgrades.” Needham’s John Todaro added to that point, saying although the results of the merge are “obvious,” it could take at least six months to see them in the wild. “The changes resulting from the merge will likely take 6 months+ to actually have an impact on the ecosystem,” he said. “The merge paves the way for future technological upgrades that would bring enhanced scalability… but this is still months if not years away.” Some are also beginning to worry that ether’s new yield-generating opportunity could make it look like a security in the eyes of regulators. On Thursday, Securities and Exchange Commission Chair Gary Gensler said that staked coins could pass a key test of whether investors expect to make a return from the work of third parties, The Wall Street Journal reported . The Howey test, as it’s known, is used often to determine whether an asset is a security. Lau said that despite Ethereum’s great big feat on the environmental side, that’s just a fraction of what’s on cautious investors’ minds. “Institutions that are still on the sidelines are still getting set up and getting ready to dip their toes in. They are not looking at the merge as that trigger point, mostly because a lot of the blockers are not related to crypto at all,” he said. “It’s actually related to their own compliance procedures, their own legal teams getting comfortable with their with counterparties, for example, understanding sort of regulatory risks that may exist.”