Ethereum has completed one of its most significant milestone with the successful completion of “The Merge”, the migration to a Proof-of-Stake (PoS) consensus. Although market participants expected aggressive price actions during the event, they might not have been able to achieve their expectations.
The deal was done.
We wish everyone a happy merge. It’s a significant moment in the history of Ethereum. Everybody who contributed to the merger should be proud of what they accomplished.
— vitalik.eth (@VitalikButerin) September 15, 2022
Ethereum (ETH), trades at $1480 as of the writing. There has been a 7% loss and 8% in the past 24 hours, and seven days respectively. Although the second cryptocurrency did not consolidate a rally to the lost territory previously, the price action appears to trend to the downside in shorter time frames.
Why “The Merge” Was A No Event For Ethereum
Ethereum managed to reach the $1800 price level, but it was rejected by two macroeconomic events. QCP Capital is a trading firm recorded a lack of activity from the market in the days previous to “The Merge”.
In that sense, the event went from operating as a potential price catalyzer to either direction to a “volatility killer”. The most uncertain after about the migration to PoS, the firm believes, was the ETH forks and the miners attempting to claim a portion of the cryptocurrency’s market share.
However, the ETH forks were a “disappointment” as the proponents failed to convince the market about their future and potential to replace ETH PoS. QCP Capital pointed out:
mkt finally came to terms with ETHW as a potential massive disappointment last wk, following their “totally” whitepaper release (9 pgs of “this page is intentionally left blank”). This is in addition to the failure of the chain ID, which means that nobody will actually be able test the chain before fork.
Still, the market might experience some volatility as large players unwind their “Merge” positions. QCP Capital concluded the following:
While the ETH POS is bullish longer-term, we do not expect a sudden breakout after-merge. Post-merge, we expect a lot of pressure to the ETH vols.
The Macro Outlook
A slowdown in inflation might support the about, QCP Capital believes the upward trajectory for this metric has “peaked and is headed lower”. This could provide support for crypto and risk assets to rebound from current levels.
Market participants are pricing in an aggressive Federal Reserve, which could be a bullish indicator if it suggests a more aggressive monetary policy. Market participants expect the Fed to raise interest rates by 75-100 basis points (bps) at the time this article was written.
With a continuing downward trend in inflation, Fed could finally change and crypto markets might rebound. Ethereum seems poised to take advantage of a shift in macro-dynamics with the successful “Merge”.