Ethereum Rallies Amid Merge Hype
Ethereum is exploding.
In a 12 percent gain on Saturday, the second-largest cryptocurrency momentarily reached $1,363 for the first price in a month. Since then, it has had a minor cool-off and is now trading at around $1,355. Even while Bitcoin still dominates the market, BTC gained about 3.2%, suggesting that Ethereum is driving the current rise.
The market has rebounded as a result of the ETH increase, enabling companies like Synthetix and Avalanche to post double-digit gains. LDO, the governance token for the Lido DAO, is up 22.8 percent while Lido-staked ETH also increased by around 12.6 percent.
While the precise cause of the increase is unknown, one possibility is the growing acceptance of Ethereum and its impending “Merge” to Proof-of-Stake. The Merge was addressed on the most recent Consensus Layer Call hosted by the Ethereum Foundation on Thursday. Tim Beiko, a member of the Ethereum Foundation, proposed a tentative launch date of September 19, giving the clearest indication yet that the Merge would be happening soon.
In the next weeks, Ethereum will undergo one last test on the Goerli network before the Merge may occur on mainnet. After that, the actual launch will take place, though Beiko has noted that the anticipated mid-September timeframe may alter.
The Merge upgrade combines Ethereum’s consensus and execution layers in order to switch the network from Proof-of-Work to Proof-of-Stake. The Merge has also been widely viewed as a positive trigger for ETH since it is scheduled to cut the network’s issuance by about 90%. This is predicted to reduce the network’s energy usage by 99.95%. With the migration to Proof-of-Stake, the network will stop paying miners and just charge validators. Following the upgrade, it is predicted that ETH may turn into a deflationary asset because Ethereum also uses a part of its supply to pay for gas fees via EIP-1559. If the Merge launches on September 19, the ETH supply would peak at 120.2 million and gradually start to decline, according to ultrasound.money.
Despite the year-long fall that has affected ETH and other crypto assets, the market may now be pricing in the impact of the upgrade as the Merge narrative has started to take hold in the wake of the most recent Ethereum Foundation call.