Ethereum remains one of the most talked about cryptocurrencies in the market. Not only that it is the second biggest cryptocurrency in the market based on market capitalization, but it also has the most utility among all other cryptocurrencies. More recently, Ethereum completed the Merge, one of the most talked about updates in the Ethereum network in the last few months. This saw ETH finally transitioning from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This highly anticipated update kept people wondering about its impact on the price of ETH. Hence, this article focuses on how the merge may affect the future price of Ethereum. Furthermore, we will go through experts’ predictions and how realistic they may be for Ethereum in the merge aftermath.
First, let’s have a brief overview of how Ethereum is performing at the moment, days after the marge, and months after the bull run of 2021 ended.
Ethereum Price – Where Does Ethereum Stand Now?
Ethereum reached its all-time high in the last quarter of 2021. Simply put, it was the biggest bull run in the history of the market, where ETH alone reached almost $4,900 at its peak. The following months, however, marked the end of the bull run, where the downtrend saw ETH dropping as low as $900. Nonetheless, ETH had a corrective wave, which saw the price spike up to $2,000 once again.
Currently, the general emotion in the market is fear, and ETH is trading at around $1,300. Still, ETH found support at the expected $900 zone, which could prove to be crucial for the following weeks. ETH supporters acknowledge the fact that the market is bearish right now, and the selling pressure is not that high at the moment. This could see ETH decline furthermore in the coming weeks/months.
If ETH goes below its natural support at $900, the price has the potential to decline as low as $500 in the coming months, considering only the technical factors. A reversal is unlikely at the moment when looking at the fundamentals of the global economy at the moment.
The silver lining here is the most recent update: The Merge. Still, the immediate impact of the merge was a decrease in the price of ETH. Hence, investors are questioning the most recent update without taking into account other technical and fundamental factors.
Without further ado, let’s briefly explain this update and its potential impact on the price of ETH.
Ethereum Merge Explained
Ethereum 2.0 is something that every ETH enthusiast knows about. While the update started years ago, one of the most important phases of the update finally concluded on September 15th. That is, transitioning the ETH chain from Proof-of-Work (PoW) to Proof-of-Stake (PoS). The reason why this update is called the Merge is that Ethereum merged with the Beacon Chain, merging Ethereum’s execution layer with the consensus layer.
Fundamentally, the update suggests that users will no longer mine ETH blocks to verify transactions. Rather, users will stake their ETH to verify transactions. The more someone stakes, the more the network rewards them for their efforts. Ethereum introduced staking earlier so that users get acquainted with staking rather than mining.
What this implies is that electricity is no longer the primary means to create new blocks in the network. Instead, users’ funds are directly used as they are locked for a specific period, consequently rewarding the users.
For months, the merge was one of the most talked about events in the Ethereum network. There was no exact date on when the merge would finally occur. The update finally concluded on September 15th, 2022. The exact time was determined when the Total Terminal Difficulty (TTD) of mining ETH blocks was reached. The TTD for the update to self-occur was set at 58,750,000,000,000,000,000,000.
But not all Ethereum users were necessarily in favor of the merge. Some argued that PoS entails less decentralization and is slightly riskier, with PoW being the more tested mechanism in recent years. PoW proponents already began with plans to have an Ethereum fork, which would see a continuation of ETH’s PoW into a new blockchain. However, so far, things are not necessarily going to plan. Some people are using the fork to generate more income from the potential price movements in this new fork.
How Can the Merge Impact the Price of Ethereum?
The merge will not necessarily have a huge impact on the Ethereum ecosystem. To illustrate, fees are not likely to decrease because of the merge. Perhaps fees may decline in the future with the upcoming updates in 2023. However, the merge alone does not show any reason why the fees decrease or increase.
The same applies to transaction speed. Prior to the merge, ETH blocks were generated every 13-14 seconds. After the merge, ETH blocks are generated every 12 seconds. While some may consider this an improvement, it is not that noticeable for the average Ethereum user. ETH is still miles behind the likes of Solana in terms of transaction speed. This is yet another field where ETH may improve with the upcoming updates.
Lastly, the merge may have a significant impact on the price of ETH. Being one of the biggest updates and the most anticipated event for ETH supporters in the last few years, the merge could provide a significant boost to the price of ETH. But that is not the case so far. Ever since the merge, the price of ETH has been declining, leaving many inventors to wonder whether the update was a good thing. Of course, many fail to realize that there are hundreds of factors that influence the price of a cryptocurrency. The merge may or may not be the sole reason why the price declined so far.
Considering that ETH miners are no longer able to mine, many may have sold their ETH tokens to compensate for the prices of ETH mining rigs that they purchased. Moreover, some people may simply not believe in PoS as they do in PoW, assuming that there may be challenges for the Ethereum ecosystem in the upcoming months.
Nonetheless, speaking about the impact that the merge may have is still early, despite the already decline in the price of ETH. Keep in mind that the overall market is bearish, meaning that the price of ETH may not soar until the market is bullish again.
What’s Next for Ethereum?
As for the future of Ethereum, developers are now working on Ethereum shards, which may, in fact affect both transaction fees and transaction speed in the ETH ecosystem. This may undoubtedly have an effect in the price of ETH, considering that the ecosystem may become much more efficient.
Another area where developers are working is the proposer builder separation (PBS). As the name suggests, this update will separate transaction proposers from block builders in the network. This update aims to improve efficiency even more in the network.
As for ETH miners, they can continue to mine in another network, whether that is another fork or something like Ethereum Classic.
Ethereum Price Prediction
Finally, time to talk about the potential future price of Ethereum. With the world being in an economic recession, it’s hard to predict that people are willing to spend their money on aiming to recover the market. It’s not only that the crypto market is bearish; the stock market and other financial markets are also struggling to overcome the difficulties that 2022 has brought. Whether that is because of the war between Russia and Ukraine or simply the world trying to adjust to the post-pandemic world, cryptocurrencies are unlikely to recover just now.
Considering the many factors of the price of Ethereum, such as the price of the world’s biggest cryptocurrency, Bitcoin, ETH may not have a surge in price just now. Many are predicting that the price may decline even more in the coming months, with ETH potentially moving below $1,000. Nonetheless, one thing we know about cryptocurrencies is that they eventually recover. With the price expected to decline further, it could prove to be the best time to buy ETH in the long run.
In the long run, considering mass adoption, BTC halving in 2024, and Ethereum’s upcoming updates that improve its efficiency, Ethereum may increase at higher rates in the coming years. We at Crypto Academy predict that ETH may, at one point, go above $10,000 in the coming years. With the current supply, that would mean a market capitalization of more than $1 trillion for ETH alone. Hence, considering that the supply may continue to increase, a higher price for ETH would only be possible if BTC increases at much larger rates.
Can Ethereum Surpass Bitcoin?
Here comes the big question: Will Ethereum ever pass Bitcoin?
The question remains largely subjective, considering that it depends on whether people may continue to support Bitcoin in the coming years. It’s hard to believe that they won’t, considering that BTC is the world’s first cryptocurrency and one of the biggest investments in the world. It’s unlikely for institutional investors to stop their support for BTC, considering that it contains the least risk compared to other altcoins. With its high market share, Bitcoin is unlikely to back down any time soon.
It is true, however, that Bitcoin may never have the utility that Ethereum has. The latter is no longer simply an investment but an ecosystem where almost every digital service can be conducted in a decentralized manner. Hence, ETH has the potential to take a large portion of Bitcoin’s market share. However, surpassing Bitcoin is very unlikely at the moment.
Another question we have to ask is if Ethereum killers can actually ‘kill’ Ethereum in the long run. Considering that Ethereum 2.0 may not prove to be the stepping stone for a better network, hundreds of crypto projects would want to take Ethereum’s throne with their faster and cheaper transactions. Nonetheless, this is also very unlikely at the moment. ETH remains the biggest altcoin and one of the most-used crypto networks in the world.
Either way, the future looks bright for Ethereum, with the merge proving to be one step closer toward the future of Ethereum and perhaps the future of all cryptocurrencies.
Frequently Asked Questions (FAQ)
What is Ethereum merge?
Ethereum merge is one of the most anticipated Ethereum updates of 2022. It merges the executive layer with the beacon chain to transition ETH from Proof-of-Work to Proof-of-Stake.
What will happen to Ethereum in 2022?
It is uncertain what may happen to the price of ETH in the coming months. Nonetheless, the crypto market, in general, is bearish. Hence, ETH may decline before a recovery takes place.
Is the merge done?
The merge occurred on September 15, 2022.
Will Ethereum merge increase the price of ETH?
The merge alone does not indicate that there may be drastic changes in the price of ETH. Instead, hundreds of other technical and fundamental factors related to the merge can influence the price of ETH. Experts predict ETH to increase in the long run.
Takeaways
- Ethereum remains the biggest altcoin in the crypto market.
- The Ethereum merge was one of the highest anticipated updates of 2022.
- The merge saw Ethereum transitioning from PoW to PoS.
- The merge may not affect transaction speed and fees largely as of now.
- Ethereum is still bearish and in a downtrend.
- Considering all fundamental and technical factors, ETH may reach $10,000 in the long run.
- While Ethereum has more utility, it is unlikely that it can surpass Bitcoin.
- More updates in the Ethereum ecosystem are expected in 2023.