The Ethereum cryptocurrency is undergoing a critical update, and now the date is set: it should be September 19. This news alone can move the price up significantly – analysts therefore expect a strong impact on the course as soon as the upgrade is released. Is “The Merge” Driving Ethereum to All-Time High?
Ethereum Gets an Update: With “The Merge” for AZH?
Investors and analysts are currently watching Ethereum with interest: the second most valuable digital asset has gained as much as 35% in the last seven days, leading the crypto top 20 by far (data from Coinmarketcap.com). The reason: the blockchain of the leading smart contract network is undergoing a critical update. This happens in stages, the next one is called “The Merge” and provides the transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus mechanism. “The merge is the most significant upgrade in Ethereum’s history,” commented the Ethereum Foundation.
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The transition has been postponed several times, and now the date has been set: It was supposed to be September 19. And since the date became known, the ETH price seems to have been inspired. The cryptocurrency is facing a correction of almost 5% in the last 24 hours. However, this is likely due to profit taking after the recent rally. Either way, traders and analysts expect the update to Ethereum 2.0 (or the “consensus layer” as the developers call it) to have a strong price impact. Pseudonymous chart expert DonAlt, for example, already expects a push toward $2,200 or $2,600, as he suggests in a graphic. “The hype around The Merge” is “only just beginning,” the analyst told his more than 417,000 Twitter followers.
$ETH up to date:
I wanted a $1000+ close to ETH, I got one.
Up 50% on this position too, still not willing to sell.
$1800 is an interesting area on the low timeframes, but since the merge hype is just starting, I’ll probably hold until my target is hit or I’m void. pic.twitter.com/vUsyNgiUe7
— DonAlt (@CryptoDonAlt) 18 July 2022
Coin Bureau’s popular crypto YouTuber “Guy” (2.08 million subscribers) is also bullish on Ethereum 2.0. “If The Merge eventually happens, we will most likely see an increase in the ETH price,” the analyst said. However, a short-term divestment is likely afterwards – again due to profit taking. Apart from that, “Guy” thinks like many other industry observers: He invests in ETH for the long term – and assumes a continuous price increase. Background: Ethereum’s pioneering position in the field of DeFi (decentralized finance). Along with NFTs (non-fungible tokens), DeFi is one of the fastest growing crypto sectors – and no other blockchain is used for this more often than Ethereum.
Ethereum, 2.0 & The Merge: What Does the Update Bring?
No more miners, no PoW, but PoS and staking: The Merge turns things upside down. Specifically, the update must solve, for example, the network’s scaling problems and enable significantly more transactions. This should be possible using a technique called sharding. Their introduction is planned for the first quarter of 2023. According to co-founder Vitalik Buterin, Ethereum will then be able to handle 100,000 transactions per second (TPS) via second-layer solutions. For comparison: In its current form, the smart contract platform only achieves 15 TPS.
In addition, the developers promise greater security and significantly lower energy consumption: the switch to proof-of-stake technology is said to provide savings of 99.95%. However, contrary to popular belief and the hopes of many ETH users, The Merge will not reduce network fees. Because: The merger is a change in the consensus mechanism, not an expansion of network capacity. The costs for network use thus remain unchanged.