The merger is close at hand, so it’s time for Ethereum to shine. The eternal second most popular cryptocurrency by market capitalization has been ahead of bitcoin for the past few days. Is the reason for the return of the market’s appetite for risk? Or is it just the fact that the Ethereum developers have announced a specific date for the mythical merger? Let’s take a look at the numbers, facts, and expert opinions to find out exactly what’s going on.
AT Weekly update, an Arcane Research newsletter, they note that the ETHBTC pair rose “from 0.053 on July 12 to 0.7 on July 19.” These are “levels not seen since mid-May,” but why? According to Arcane, this “may be due to heightened risk appetite in the market, as evidenced by the sharp recovery in altcoins across the board.” They highlight another factor: “Celsius has repaid its DeFi loans. This helped to reduce the downward gravitational pull caused by potential kills and the uncertainty associated with contamination.”
And then, of course, the merger.
What do experts say about the merger?
Facts are facts, Ethereum is on the rise. In a previous NewsBTC report analyzed the state of the market:
“Ethereum has crossed an important technical point. After trending below the 50-day moving average for most of last month, ETH reversed this technical level and is now comfortably above it. The consequence of this was a complete 180-degree reversal from bearish to bullish, especially in the short term.”
As for the likely cause, Arcane Research has already named two. The main thing, however, is the possibility of merging. Back to the weekly update:
“On Thursday, July 14th, Ethereum Foundation member Tim Beiko proposed September 19th as a tentative launch date for the merger. This could have benefited ETH, leading to a spike last week. After the announcement, the ETH token staked by Lido moved closer to ETH parity.”
In another NewsBTC report we quoted another expert trying to figure out the situation. According to Youwei Yang, director of financial analytics at StoneX, the reasons for the recent surge are:
“Firstly, this is the recently announced time for an update to the Ethereum “merger”, which should make the network significantly more energy efficient. Yang argues that the “calming” of macroeconomic concerns is the second.”
ETHBTC price chart on Coinbase | Source: ETHBTC by The Weekly Update
Is the Ethereum Merger a “Buy the Rumors” Event?
Moving from Proof-Of-Work to a Proof-Of-Stake consensus mechanism consumes less power, but brings with it its own set of challenges. Their discussion is beyond the scope of this article. An important part of the equation for Ethereum holders is that the merger will finally bring native staking to the blockchain. Thousands of ETH already locked in the Beacon Chain will finally bring real results, and a new type of user will appear – validators.
Is that enough to justify the price hike? Absolutely. Is the merger guaranteed on September 19th? Probably not, given that Ethereum has delayed its difficulty bomb five times already.
ETH price chart for 07/20/2022 on Bitfinex | Source: ETH/USD on TradingView.com
Is the infection event that caused everything to turn red over?
According to Arcane, “The contagion seems to be clearing up and prices are stabilizing. This recovery can be seen as a healthy confirmation of market normalization as market stress subsides.” Their interpretation situation although it may be overly optimistic. A pseudonymous Twitter user who describes himself as a “defi trader/analyst at a major crypto fund and uses Nansen almost daily” believes that the merger or not will lead to more problems.
3AC has dozens of similar wallets with thousands of ETH. It is very likely that all these wallets will be liquidated in order to pay off creditors. Check the amount of funds that have been moved from only one wallet. pic.twitter.com/75HkR097zV
— jbjbjb (@bryptobricks) July 19, 2022
The Trial of Three Arrows Capital is still ongoing and “3AC still has thousands of ETH. It is very likely that all these wallets will be liquidated in order to pay off creditors. If a it happens, it “will trigger a sharp selloff in the broader crypto ecosystem, triggering the next catalyst.”
Sorry for raining down on the Ethereum parade, but these are the facts. Good luck with the merge though.
Featured Image by Loic Leray on Unsplash | Charts by TradingView and The Weekly Update
Credit : www.newsbtc.com