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The Merge – Will Ethereum Merge Increase Price?

Rea Kolgeci

The current economic recession has taken the world by storm, impacting every sphere of life. As life gets more expensive, people have less money to invest and risk in certain markets; especially the crypto market. We all know that this market is one of the most volatile markets out there. As volatile as it is, however, the crypto market has undoubtedly thrived during this crisis. Although thousands of cryptocurrencies and tokens are trading more than 80% under their all-time highs, the major ones are outperforming most predictions made by experts. Even during such times, projects are continuing to build their infrastructure, fastening the pace of Web 3.0 development, and simultaneously paving the road for to their own success. 

Of course, Bitcoin and Ethereum are still leading the market; with Bitcoin still being the biggest cryptocurrency regarding market capitalization. Nevertheless, many experts are doubting that this will be the case in the near future. On the 15th of September, one of the biggest events in the cryptocurrency market is set to occur. According to the Ethereum Foundation, the so-called “Merge” is going to drastically improve the Ethereum network. They aim to do this by migrating their network from the Proof-of-Work (PoW) consensus mechanism to the Proof-of-Stake (PoS) consensus mechanism. Before we get into the details of how will the “Ethereum Merge” will happen, let’s answer the most important question: Will Ethereum Merge increase the price?

Will Ethereum Merge Increase Price?

Of course, the market performance of Ethereum is not solely based on how the Merge plays out. Nonetheless, we will try to estimate the effect that this event could have on the market performance of ETH. Ultimately, we will try to make a prediction on Ethereum using both technical and fundamental factors.

To begin with, this event has been talked about for years. Taking that into consideration, everybody in the crypto space is extremely hyped up right now. Since the beginning of summer, the news were full of articles and reports made specifically about this event. The more this happened, the more people understood the importance that Merge has in regard to the future of this industry. All this publicity has served Ethereum right and Ethereum saw huge price increases this summer. During the second week of June, Ethereum was trading at a price of about 900$. Today, on the 14th of September, just one day before the Merge, Ethereum is trading at approx. 1600$. While the whole market has been on a decline, Ethereum, as well as Bitcoin, have been seeing gains.

Well, many experts believe that this is not the peak of this years growth. The Merge is expected to improve Ethereum and its infrastructure as a whole. This, in return, might lure in investors. With Ethereum becoming better and better, capital from other smart contract compatible projects that are not providing what they promised might start to flow in. Moreover, corporations that are looking for ways to enter the crypto industry will be provided with an improved, more efficient platform, and won’t have to search for alternatives anymore.

Will the Merge Increase ETH Price?

Ultimately, Ethereum will become better. Gas fees will be low. Transactions will be seamless. Energy consumption will drop by 99.99%. Even though the Ethereum Foundation promises that the Merge is planned to improve Ethereum, they acknowledge the fact that this will not be the panacea for Ethereum. They know that they have much to work on even after the Merge occurs. Not to mention the fact that the Merge might even fail. 

When it comes to its price, though, we also believe that it is likely to increase. When you provide a better product, the demand is likely to increase; but that is not always the case. There are many things you need to consider before investing, especially during the beginning of a recessions. The current global crises will play a huge role on how the markets perform, and this includes the crypto market as well. We estimate that it is possible for Ethereum to see a 30%-50% increase during the weeks after the Merge. Please keep in mind that the Merge could possibly fail. If that happens, the price of Ethereum could drop drastically. 

What is Ethereum 2.0?

The upcoming, most significant upgrade to the Ethereum network is called Ethereum 2.0.

Scalable execution of unstoppable applications has always been the aim of the Ethereum project. Nowadays, the majority of its users are “almost” unstoppable (some are still semi-centralized, therefore, stoppable).

These decentralized applications, however, are seldom at scale. Only roughly 15 transactions may now be processed per second on the Ethereum network. The Proof-of-Stake chain (ETH 2.0) will initially coexist with the original Proof-of-Work chain (ETH 1.0). There will be two blockchains for Ethereum as a result.

Moreover, it will we implemented over several years in several phases, each of which will provide new system enhancements. 

What is the Merge?

The Merge is essentially an update to Ethereum’s software. After more than eight years of research and discussion, the merge will happen on September 15.

With the Merge, the Ethereum’s current consensus would switch from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Its aim is to have benefits beyond lowering energy usage. For instance, decreasing the high transaction fees that are associated with Ether, which is the platform’s native currency. 

What Will Happen to Non-Fungible Tokens (NFTs) After the Merge?

In case the Ethereum Merge will result in a blockchain split in two, it might result in a duplication of NFTs

First and foremost, people will see a significant shift in their energy consumption and the network could face a popularity surge. In other words, the Ethereum Merge aims to cut the energy consumption in half meaning that NFT users can sell and mint them in a more sustainable way. 

How Will the Merge Affect Bitcoin?

Bitcoin reached its all-time high in November 2021 with a price of $69,000. Since then, the economy has been struggling which has negatively impacted the Bitcoin’s price and the market as a whole. 

The same way the de-pegging of UST (the Luna stablecoin) negatively affected the market performance of Bitcoin, the same way the Ethereum merge might affect it. The outcome of the Ethereum Merge is likely one of the most important factors one should consider when trying to make an estimation on the Bitcoin’s price. 

How Will the Merge Affect the Market?

Ethereum developers have been operating effectively two distinct blockchains simultaneously since December 2020.

They tested the Proof-of-Stake mechanism with the Beacon version, while the Mainnet version continued to operate as normal with Proof-of-Work. However, having both versions active allowed attackers two times the possible entry points into Ethereum.

After the Merge, financial transactions will only exist on Beacon and the Mainnet version would vanish. The likelihood of a hacker damaging the blockchain will be lowered by deleting one version of the chain and having a small pool of validators, according to engineers.

Because they haven’t been thoroughly evaluated, it’s crucial to remember that these improvements haven’t yet demonstrated that they make accounts safer. On the website of the platform, Ethereum developers have published a warning outlining possible hacking tactics for defrauding users of the virtual currency. 

Ethereum Merge News

CNBC

The CNBC stated that it is the last chance to buy ether before its historic makeover. They explain how the ether token has outperformed Bitcoin by a wide range this year. As we also mentioned above, this Ethereum merge will result in more energy-efficient transactions and the real surging momentum of ETH’s price might be seen after the merge happens. 

CoinDesk

CoinDesk also wrote a news article monitoring the Ethereum Merge. They wrote what a successful Ethereum upgrade will look like after this Merge happens on September 15. A interesting fact that they pointed out is that the timing of the Merge is scheduled to happen around something called Terminal Total Difficulty number. This TTD number represents a cumulative difficulty of all blocks that have ever been mined under the Ethereum’s PoW mechanism.  

Ethereum Merge Price Prediction

If the Ethereum Merge turns out to be successful, we predict that the current $1,595.77 price of Ethereum might increase significantly and reach up to $2,174 by the middle of October, 2022.

There is a very high chance that we can see Ethereum rally up to the $2,000 levels that it was before, and probably exceed that price, only if the bull takes control. According to CoinMarketCap, the price of Ethereum had a 25.20% increase on the trading volume, which is another sign that the price of ETH might go through a bullish rise.

Moreover, we are very optimistic that by the end of the year, ETH might be trading between $2,400 and $3,000.

Frequently Asked Questions (FAQ)

Could the Merge change the future of cryptocurrency?

The Ethereum Merge will significantly impact the future of cryptocurrencies. How? The ETH Merge will reduce the negative impacts of cryptocurrency mining’s and also will expand its usefulness as a means of financial transactions. 

Should I buy Ethereum before or after the Merge?

Although this is not financial advice, we believe that there is no wrong timing in entering the market. This is especially valid when it comes to major cryptocurrencies such as Ethereum. So, we will continue to stack up cryptocurrencies on our own portfolios. 

Some members of our team decided to buy more ETH before the merge while some decided to sell all of it before the merge.

Takeaways

  • The Ethereum Merge is set to happen in September 15, 2022.
  • This Merge will affect the crypto industry as a whole, especially the price of Bitcoin.
  • Post-Merge, Ethereum will experience a surge in price.
  • The price of Ethereum might reach between $2400 and $3000 by the end of the year.

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