The Merge: Will the market reinforce the Ethereum large -scale update?

Recently, the price of Ethereum for the first time since May overcame $ 2000. The take-off was preceded by the successful translation of the Goerli dusk to Proof-OF-Stake (POS) and the transfer of the approximate date on the main network from September 19 to September 15-16.

As The Merge approaches the community, discussions flare up with renewed vigor about the likely movement of the price of the second in capitalization of cryptocurrency, the viability of the potential fork ETHW and the prospects of Ethereum Classic.

• The potential influence of The Merge on the market is significantly. However, to predict its consequences for the coming weeks and months after the update is quite difficult.
• In the medium and long term, the price of Ethereum is highly likely to grow due to deflation and gradual improvement of the system.
• The future of Ethereum Classic and the potential fork ETHW is vague – projects do not have wide support for community.
• Tokens inherited from the air are unlikely to have value on the Ethpow network. Ethereum Classic Defi Ecosystem is poorly developed.

Is it to wait for growth from updated Ethereum?

A number of metrics indicate the interest of market participants in Ethereum on the eve of the most important and complex update in the history of cryptocurrency.

For example, the number of coins continues to grow confidently on a deposit contract of the level of consensus (ETH2).

Glassnode analysts came to the conclusion that the traders of Ethereum-derivators are “extremely optimistic” for September. Based Next one! Hodlnaut on the ratios of calls and a vestibule of contracts, as well as the indicators of the OI, investors make rates for the price of cryptocurrencies above $ 2200- up to $ 5,000.

“September markets for futures and options are in backwoods. This suggests that the traders are expecting The Merge to “buy at rumors and sell on facts,” holding appropriate positions, ”the researchers said.

The fact that investors are focused on Ethereum is also evidenced by the volatility. Its scope of oscillations is much higher than that of bitcoin.

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Huobi Research experts are convinced that the impact of the upcoming update on the market “will be comprehensive and significant”. In their opinion, Ethereum with a high probability “will enter the deflation phase”.

This thesis is confirmed by Ultrasound Money. According to the service, against the background of The Merge, the predicted cryptocurrency supply will reach the peak at 120.4 million ETH. Then the indicator will begin to decline smoothly due to the burning of coins as part of the EIP-1559 mechanism, activated during the London hard fork.

After Ethereum transition to POS, the volume of annual emission of new coins will decrease from 5.5 million ETH to 0.6 million ETH (approximately 15,000 ETH per day versus ~ 1600 ETH) – more than 9 times. Annual growth in tokens will fall from 4.3% to 0.3%.

“If the adoption by Ethereum users will grow in the coming months and years after the Merge upgrade, the broadcasting of the broadcast will decrease even faster,” experts Galaxy Digital Research emphasized, indicating the influence of EIP-15559.

Another significant consequence of the transition to POS will be disposal from the game of miners. This can significantly reduce sales pressure.

“ETH involved in the Stayking will get out of the appeal, which will become a positive factor for the price. The increase in the air of the ether involved in the steaking will be most likely to strengthen the course, ”Huobi Research analysts shared their thoughts.

They also suggested that the rate of staying profitability is unlikely to be a sky -high. This means a low pace of emissions of new coins.

“Staying ether is much less risky in comparison with investments in other protocols. By logic, the interest rate proposed by the Ethereum ecosystem should be lower in comparison with other options, ”the researchers emphasized.

Huobi Research experts also expressed optimism regarding the short -term prospects for the price of the ether. In their opinion, many market participants will actively buy ETH on the eve of The Merge to get the forks of the second in capitalization of cryptocurrency.

Will Ethw survive after The Merge?

At the end of July, the influential miner Chandler GO proposed launching Fork Ethereum, which will continue to work at the Proof-OF-WORK (POW) algorithm. The new Ethereum Pow network (EthW or Ethpow) is designed to enable cryptocurrency miners to continue work after mergers.

However, the computing power of the Ethereum network is almost 30 times higher than Ethereum Classic – ~ 900 Th/S compared to ~ 31 Th/S.

For the above period, the price of the ETC increased by 104.6%, while ETH – only by 39.1%.

Nevertheless, the Heshprase indicator in ETH is still higher than 20%. Other words, the second one in capitalization of cryptocurrency is more profitable to obtain, despite the rapid growth of Ethereum Classic.

Huobi Research analysts suggested that future potential forks can have a hashprais comparable to ETC.

“In this case, miners are highly likely to accept these tokens as an alternative,” experts emphasized.

According to them, even despite the upcoming The Merge, miners remain influential market players. One of the possible options for them is to switch to blockchains where tokens production is possible through video cards: etc, ERG, RVN, CFX, FLUX, FIRO, etc. D.

“Among the above coins, ETC has the largest indicators of hashrate and capitalization, as well as the best compatibility with Ethereum,” said Huobi Research.

In their opinion, a significant part of the hashReite migrates on Ethereum Classic. Thanks to this, “the trust in the ecosystem” will increase.

“If the level of development [ecosystem] will correspond to the growth rate of the hash, the price can grow,” experts put forward the hypothesis.

According to their calculations, the migration of only 3% of the Ethereum hashReum is capable of doubleting the computing power of the Ethereum Classic network. This will be able to income miners by 50%.

“It is still unclear whether the pace of development of the ecosystem and the introduction of innovations will manage to keep up with the increase in price. If the ETC is capable of getting 10% of the Heshrelite from ETH, the price of the ETC can potentially become four times higher than the current one ($ 148 compared to the current mark of $ 37), ”said the researchers of Huobi Research.

So far, the level of development of the Ethereum Classic ecosystem is not compared to Ethereum. On the basis of the latter, many decentralized applications have been created, the total TVL of which is $ 65 billion (DEFI LLAMA data as of 17.08.2022).

The Ethereum Classic Defi Ecosystem is represented by only a few platforms, and the total TVL is slightly more than $ 1 million.

conclusions

The upcoming Ethereum update, although it is important and expected, will not yet solve the problem of scaling. It will create the basis for a number of future updates and improvements of the system. A long, thorny path has yet to go.

In the current increase in the price of ETH, a speculative component is traced. The ascending trend is mostly based on the optimism of investors and the general fishing, due to the probable end of the bear cycle of the market. Given the traditionally high correlation of Ethereum with bitcoin, we can expect a continuation of the unidirectional movement of these two assets.

On the other hand, the volume of the new emission of Ethereum will decrease by many times compared to the current level. This promises a gradual increase in the price in the medium and short-term perspective. Much also depends on the onchain activity, the development of the Defi-transist, as well as the success of developers in the implementation of the following phase-The Surge, The Verge, The Purge and The Splurge.

The prospects of the ETHW fork are foggy, since it has no support from a significant part of the community. If Tuzemun happens, then, most likely, only in the short term. For example, Bitcoin Cash at first demonstrated speculative growth and seemed attractive to miners, but the “killer” of the first cryptocurrency did not become.

The long-term prospects of Ethereum Classic are also ghostly, given the low development level of the Defi Excosteum. The level of oncha-active, transactional demand for cryptocurrency and ultimately the price largely depends on the latter.

Only time will tell how true the above hypotheses and forecasts are. Be that as it may, there are many interesting events ahead.

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