ethereum: Is Ethereum headed towards $2,000 ahead of The Merge?

Synopsis

​’The merge’ will shift Ethereum to a proof-of-stake (PoS) mechanism from its existing proof-of-work (PoW) mechanism, making it more energy efficient and carbon effective.Vikram Subburaj, CEO, Giottus Crypto Platform, said that the Merge will change the consensus mechanism but it will not increase the capacity of the Ethereum network.

TOI.inEthereum, the second largest crypto asset, was in the headlines on Tuesday, ahead of its much-awaited software update announcement as ‘The Merge’ by the crypto community.

‘The merge’ will shift Ethereum to a proof-of-stake (PoS) mechanism from its existing proof-of-work (PoW) mechanism, making it more energy efficient and carbon effective.

Vikram Subburaj, CEO, Giottus Crypto Platform, said that the Merge will change the consensus mechanism but it will not increase the capacity of the Ethereum network.

Merge may lead to forked chains similar to Ethereum Classic (ETC) that split from Ethereum in 2016,” he said.

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View Details »Ahead of this major update, slated to be completed between September 10-20 this year, the token rose as much as 11 per cent on Tuesday, near the $1,600 mark.

Ethereum’s native currency Ether (ETH) zoomed about 10.7 per cent from its 24 hours low price of $1,445.37 to hit 1,595.56. However, it was trading at $1,586.85 at 14.45 hours IST, the data from Coinmarketcap suggested.

The total market capitalization of the token remained below the $200 billion mark but volumes jumped more than 34 per cent as the ETH tokens worth more than 19 billion exchanged hands in the last 24 hours, as per the data.

However, analysts remain mixed about the price movement of the token ahead of the major update. It is believed by some that Ethereum is likely to move higher ahead of the software update. Whereas others believe that the token will stabilize in the long run after some near-term volatility.

Commenting on The Merge, Edul Patel, CEO and co-founder, Mudrex, said that Ethereum has been performing better than Bitcoin over the past few months as the Merge draws closer.

“The price of the second largest cryptocurrency is expected to break out of the $2,000 level before the much-awaited crypto update,” Patel told Etmarkets.com.

The Bellatrix upgrade will activate on the Beacon Chain on September 6, 2022. This upgrade is responsible for setting the rest of the Merge process. The Merge is expected between September 10-20, 2022, the Ethereum foundation disclosed.

Subburaj from Giottus believes that ‘The Merge’ may lead to high volatility in Ethereum prices in the short term, depending on its success and outcomes from it. “Over the long term, this will make Ethereum a stronger crypto asset,” he said.

According to Subburaj, for now, investors should only hold Ethereum on a wallet or exchange that supports the Merge and other new forks.

“All coins will be automatically transferred to the new blockchain while any new forked coins will also be issued to the investor,” he said. “NFT holders are encouraged to hold their NFTs in private wallets,” he added.

Amid all the enthusiasm, a section of blockchain activists and critics are concerned about the event as they believe that it is going to adversely destabilise the system.

The expense of participating in the mining operation would eventually become unaffordable, driving away small partners and leading to centralisation, they said.

The Merge is going to send ripples in the surroundings. Ethereum mining is estimated to be worth $19 billion, and ‘Merge’ is expected to instantly put an end to the entire sector.
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    Updated: 08/30/2022 — 19:00