The merge is near, so it’s Ethereum time to shine. For the past few days, bitcoin has outperformed the eternally second-most popular cryptocurrency in terms of market capitalization. Is the return of the market’s appetite for risk the reason? Or is it just the fact that Ethereum’s developers announced a specific date for the mythical merge? Let’s examine the numbers, the facts, and the experts’ opinions to figure out exactly what’s going on.
The Weekly Update, Arcane Research’s newsletter, they point out that the ETHBTC pair surged “ from 0.053 on July 12th to 0.7 on July 19th.” It’s at “levels not seen since mid-May,” but why? According to Arcane, it “might be related to increased risk appetite in the market, evident by sharp altcoin recoveries across the board.” They identify another factor, “Celsius repaid its DeFi loans. This contributed to reducing the downward gravitational pull enforced by potential liquidations and contagion-related uncertainty.”
And then, of course, there’s the merge.
What do the experts think about The Merge
It is a fact that Ethereum is on the rise. NewsBTC previously reported on Ethereum. Analyzed the current market state:
“Ethereum has now broken above an important technical point. After trending lower than the 50-day average for much of the last month, ETH now sits comfortably above that technical level. The implication of this has been a complete 180-degree turn from bearish to bullish, especially during the short term.”
Arcane Research identified at least two probable causes. However, the most important one is likely to be the merging. The Weekly update:
“On Thursday, July 14th, the Ethereum Foundation member Tim Beiko suggested Sept 19th as the tentative launch date for the merge. This might have benefited ETH, leading to last week’s surge. Following the announcement, Lido’s staked ETH token has neared ETH parity.”
Another NewsBTC Report Another expert was quotedIt is difficult to grasp the current situation. According to Youwei Yang, director of financial analytics at StoneX, the causes for the recent surge are:
“The first is the recently announced time for the Ethereum “merge” update, which should make the network significantly more energy-efficient. Yang claims that the “calming” of macroeconomic anxieties is the second.”
ETHBTC Price Chart on Coinbase | Source: ETHBTC by The Weekly Update
Is Ethereum’s Merge a “Buy The Rumor” Event?
While the change from Proof Of Work to Proof Of Stake does require less energy, it brings with it its own set problems. You won’t be able to discuss them in this article. It is important to note that Ethereum holders will see native staking finally added to the blockchain by the merging. The Beacon Chain’s thousands of ETH will yield real results. A new class of users, validators, will emerge.
Are these enough to justifiably justify the price hike? Absolutely. Does it guarantee that the September 19th merge will occur? It is unlikely, given that Ethereum has already postponed five of its difficulties bombs.
Source: ETH/USD on TradingView.com| Source: ETH/USD on TradingView.com
Are You The One Who Sent All Things To Red Over Because Of Contagion?
According to Arcane, “contagion seems to be resolving now, with prices stabilizing. This recovery may be viewed as a healthy confirmation of the market normalizing as market stress settles down.” Their interpretation of The situationBut, it’s possible to be optimistic too much. A pseudonymous Twitter user that identifies himself as “ a trader/defi analyst at a major crypto fund and use Nansen almost daily,” thinks more pain is on the way with or without the merge.
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3AC maintains dozens more wallets with thousands of ETH. It’s very likely that all of these wallets are going to be liquidated in order to pay back creditors. Take a look at the amount of money that has been transferred from one wallet. pic.twitter.com/75HkR097zV— jbjbjb (@bryptobricks) July 19, 2022
The Three Arrows Capital trial is still unfolding, and “3AC still has with thousands of ETH. It’s very likely that all of these wallets are going to be liquidated in order to pay back creditors.” There’s a very good chance that the legal system will liquidate Three Arrows Capital’s BTC, ETH, and NFTs. You can contact us if that happens, it’s “going to cause a harsh sell-off across the broader crypto ecosystem, setting up the next catalyst down.”
Sorry to rain on Ethereum’s parade, but those are the facts. We wish you all the best with your merge.
Loic Leray, Unsplash Charts and The Weekly Update. Featured Image| Charts by TradingView and The Weekly Update