Crypto wrap: What to expect from the market after Ethereum’s “Merge”
This week’s biggest news in the crypto industry was the completion of Ethereum’s update, Merge. However, it failed to bring the market out of the bear grip. In the last seven days, Ethereum has plunged over 13 percent. Bitcoin, the largest digital currency by market capitalization (m-cap), is down nearly 5 percent.
Almost all the major cryptocurrencies, including Binance Coin (BNB), XRP, Cordano and Solana, were down more than 5 percent on Friday.
“The merger may not have an immediate impact on the price action of ETH now, as market participants take some time to digest such important events,” said Edul Patel, CEO and co-founder of investment platform Mudrex.
After the merger, Ethereum transitioned from a proof-of-work (PoW) mechanism to a proof-of-stake (PoS) mechanism. The transition is expected to cut energy consumption for minting digital tokens by 99.5 percent.
“It [Merge] will form the basis for a number of future updates and improvements to the Ethereum system. On the other hand, the Ethereum network updates have repeatedly been accompanied by unexpected technical problems, and this time everything may not go smoothly, said Johnny Lyu, CEO of KuCoin.
On Friday, Ethereum traded at $1,467, according to coinmarketcap.com.
“ETH’s next primary support level is $1,400, while the immediate resistance is $1,500,” Patel added.
“Prices may rise despite the bear market”
However, according to some experts, Ethereum’s price may rise soon.
“There is a ‘triple halving’ of the ETH supply and the asset is now deflationary,” said Parth Chaturvedi, Head of Crypto Ecosystem at a crypto trading app, CoinSwitch.
In the crypto market, a currency is deflationary if its supply is expected to decrease. This leads to a drop in the offer. Due to higher demand, prices rise.
Minal Thukral of CoinDCX had similar views.
“As the chain will now run on locked ETH, the net amount of ETH in supply/circulation is reduced and we should see it priced in the near future,” Thukral said.
What can you expect next time?
“If ETH fails to hold these levels, we could see ETH test the $1,300 level again,” Patel said.
“If Bitcoin breaks below its current level, its next support will be $19,500. While the immediate resistance is now at $20,475,” he added. On Friday, Bitcoin traded at $19,810
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