Crypto markets get a boost as Ethereum merger approaches
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(Kitco News) – Cryptocurrency followers were delighted by the sight of rising prices on Monday as Bitcoin (BTC) briefly traded above $24,000 while Ethereum (ETH) rose above $1,800 for the first time since early June.
While Tuesday’s price action has seen most of Monday’s gains given back, the ecosystem remains sour as to what led to the overall rally that gave crypto traders a taste of what it’s like to be back in a bull market.
The consensus from some of the biggest firms on Wall Street is that Ethereum has been the driving force behind the recent gains, as its upcoming merger, predicted to take place on September 19, has excited the crypto stalwarts enough to pull them out of the deep end . of crypto winters.
“Merge” refers to the ongoing transition of the Ethereum network from a proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS), a process that has been ongoing for several years.
According to JPMorgan analyst Kenneth Worthington, the impending merger has given the market a confidence boost, and many expect the price of Ether to rise once the merger is complete.
In a note to clients on Monday, Worthington suggested that “the real driver” of the recent gains in the market “has been the Ethereum merger and positive data following the launch of the Sapolia testnet in early July and the Ropsten testnet in June, indicating merger is viable in 2022.”
Ethereum-based digital asset investment products have also seen an increase in investments, according to the latest Digital Asset Fund Flows report from CoinShares, which noted that “Ethereum saw inflows totaling $16 million and is enjoying a nearly seven-consecutive week of inflows totaling $159 million.”
“We believe this turnaround in investor sentiment is due to greater clarity about the timing of The Merge where Ethereum shifts from proof-of-work to proof-of-stake,” according to CoinShares analysts.
Unintended consequences of the merger
While the widespread consensus among the crypto community is that the upcoming merger is a good thing, the process has not developed without its own set of controversies as Ether miners push back against loss of livelihood.
As a result of the move away from PoW, some in the community have pushed for the creation of ETHW, an Ethereum fork and native asset for the ETHPoW chain, which is a possible new chain supported by Ethereum’s PoW miners.
At the time of writing, ETHW is trading at a price of $91.41 after debuting on several exchanges at a price of $30 and trading as high as $140 on Monday.
While some are concerned about the effect that another Ethereum fork will have on the strength of the wider Ethereum ecosystem, it is not a big concern for the project’s co-creator Vitalik Buterin who stated: “I don’t expect Ethereum to really be significantly damaged by a other fork” while addressing the audience at the recent ETH Seoul developer event.
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