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The Ethereum Merge is one of the most important events since the emergence of blockchain and the crypto industry. The event transitions the ETH blockchain from Proof-of-Work (POW) to Proof-of-Stake (POS). And while everyone is waiting for the positive effects of the merger, the price of ETH is already reacting: the market has dropped prices significantly in the last 48 hours. Additionally, crypto analysts fear further price corrections after The Merge.
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Ethereum after The Merge with weak price action
Even if everyone is expecting a positive development in the coming days: There is still the possibility of a hard fork. When that happens, it will have a negative impact on crypto prices. So the hype surrounding the Merger could be a typical “buy the rumor, sell the news” case.
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Ethereum has already outperformed BTC in recent weeks thanks to the merger hype. However, some experts fear that there is little more going on than hype.
The aforementioned “buy the rumor and sell the news” phenomenon occurs in the capital markets. This is when asset prices rise due to high expectations from economic events or reports. The increased prices fall again after the event is over.
Popular crypto trader and influencer Lark Davis has also shared his thoughts on the hype. He calls The Merge a fundamentally bullish event. Davis outlines the expected features of the upcoming Ethereum POS. However, he also explains that these will not have a significant immediate impact.
the #ethereum A merger is basically a bullish event for $ETH!
– 99.9% less energy use
– 90% reduction in emissions
– Deflationary with CEN 1559
– Better economy compared to POWBut… none of that has had a big impact overnight, and it already looks like the news may be selling!
— Davis Lark (@TheCryptoLark) September 13, 2022
According to Davis’ analysis, the effects of increasing energy efficiency, emissions and all functions will only be seen in the long term. Therefore, he believes that the Ethereum merger has the “sell the news” effect.
Another major crypto influencer, Quinten Francios, is also commenting on the hype surrounding the Merge. According to Francios, the price of Ethereum will continue to fall after The Merge, unlike the price of Bitcoin.
This means: The price of Bitcoin will increase and the price of Ethereum will decrease after The Merge. The Ethereum price will only recover after some time. In fact, the price of ETH has lost about 8% in the last 24 hours.
Ethereum: The Merge cannot solve fundamental problems
The consequences of the merger are not felt so quickly. The move changed the blockchain’s consensus mechanism on POS, but it won’t solve some other fundamental problems. Including, for example, the high gas fees. Also, it does not increase network capacity or improve transaction speed.
Aloe CEO Howard Wu expressed concern on LinkedIn about high gas charges in Tier-2s. He says these would only be scalable if enabled by Ethereum’s throughput.
Can Buterin’s four-step theory solve these problems?
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Text credit: Newsbtc
Last updated September 16, 2022
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