The upcoming upgrade The Merge of the cryptocurrency Ethereum has been the great hope in investor circles for weeks. Gradually, however, warning voices are increasing.
Photo: Panthermedia.net/grafvision (YayMicro)
The crypto industry has known only one topic for weeks: Ethereum (ETH) and the upcoming mega upgrade called “The Merge”. It should be ready in a few days. But while some analysts are expecting a price explosion in the short term, warnings are now being raised. The event is therefore overvalued – and might even have a negative impact on the price. Could Ethereum not live up to expectations with The Merge?
When is the Ethereum merge?
According to Ethereum founder Vitalik Buterin, “The Merge” will come into effect between September 10th and 20th. Then Ethereum (ETH) switches from the previous Proof-of-Work (PoW) consensus model to Proof-of-Stake (PoS). This should make the network faster, more environmentally friendly and more secure.
Reminder: even though the merge is coming around Sep 10-20, the beacon chain hard fork is on Sep 6. Make sure to update your clients before then! https://t.co/x8GQCbtNNk
— vitalik.eth (@VitalikButerin) August 30, 2022
And, so the hope of investors, of course, more valuable. The Ethereum price might rise to up to $5,000 in the course of the upgrade, according to early, optimistic forecasts. In fact, the leading smart contract platform has broken out to the upside on and off over the past few weeks – however, ETH has never been able to hold on to gains, repeatedly retreating. Ethereum is currently trading at $1,585 following a weekly loss of -4.77% (data from Coinmarketcap.com).
The performance of the asset is largely in line with that of the broader crypto market: Bitcoin (BTC) has lost around 6% in the last seven days, the ETH offshoot Ethereum Classic (ETC) around 10%. Move-to-earn app Stepn Coin (GMT) is down 12%, while Ethereum competitors Avalanche (AVAX) and Solana (SOL) are also facing intense losses, down -15% and -9.6% respectively .
Crypto Markets Before New Bull Run
Nevertheless, looking at social media gives the impression that the crypto markets are regarding to start a new bull run – boosted by the expected Ethereum upgrade. But what is really in store for investors now? Is The Merge the big opportunity many think the upgrade is? Or is the event already priced in, i.e. have traders already stocked up on ETH in anticipation of price jumps – and are just waiting to sell their coins? What’s next for Ethereum in the next few days and weeks?
How high will Ethereum be in 2022?
The pseudonymous analyst and industry observer “CryptoCapo_” is certain: Ethereum is currently experiencing the calm before the storm – because in the medium term the smart contract platform is threatened with a new crash. He sees “massive resistance” for ETH. The top trader shows his more than 502,000 Twitter followers a chart: Ethereum rose slightly in September, but then crashed brutally in October.
$ETH https://t.co/iw9a3Jg55z pic.twitter.com/UC2vqHi9hy
— il Capo Of Crypto (@CryptoCapo_) September 1, 2022
That’s not all: ETH will continue to retreat during the month of November – to up to $ 650. In relation to the current price, this corresponds to a correction of almost 60%. Only then does CryptoCapo_ expect a recovery towards old highs. Toby Lewis, CEO of crypto data provider Novum Insights, is also cautious, commenting to Bloomberg: “One thing I can guarantee: It will be a very bumpy ride.”
What will happen to Ethereum when Ethereum 2.0 comes?
Many investors are also wondering: What will actually happen to Ethereum when Ethereum 2.0 appears? Will the old coins become worthless? The all-clear can be given here: The previous Ethereum version with PoW will continue to run for a certain time following the launch of Ethereum 2.0. The “old” ETH coins can now be used in the new Ethereum 2.0 network, for example for staking. Later (in “Phase 1.5”) the PoW Ethereum network will also be switched to Proof-of-Stake and the associated ETH tokens will be made fully compatible with it.