- Ethereum price shows the affinity to move higher but is subdued due to its correlation with BTC.
- Investors can expect ETH to rally 30% in an optimistic scenario.
- A four-hour candlestick close below $1,701 will create a lower low and invalidate the bullish thesis.
Ethereum price has been dillydallying for quite some time thanks to Bitcoin’s tight consolidation. With intraday price action looking like a pump-and-dump for BTC, altcoins seem to have managed to evolve.
ETH, for example, is reacting bullish to impulse moves and remains partially reactionless to minor downtrends. Regardless of the short-term volatility, the Merge seems to be the most-talked-about topic for Ethereum and why it is a better investment option as opposed to Bitcoin in the coming cycle.
What is the Ethereum Merge?
Simply put, the Merge is an upgrade to the Ethereum blockchain that will transfer it 100% from a proof-of-work (PoW) to proof-of-stake (PoS). The main reason behind this network update is to improve the scaling, which has been a major pain point while retaining the decentralization and security aspects of the PoW chain.
While there have been multiple delays in the past, the developers have approximated that it should take place in August.
As announced by an Ethereum developer, Ethereum’s test network Ropsten will be merged, ie., the chain will shift to PoS on June 8. After Ropsten, the Merge will happen on Sepolia and then Goerli, with two weeks of buffer time in between each upgrade.
After the tests on these networks are confirmed to run without a hitch, the mainnet will be upgraded as well. The Ethereum developers and the team hope that this will happen in early August.
What if the transition to PoS happened today?
While the Merge has got many excited for fundamental reasons others are speculating about its effect on the Ethereum price. One Twitter user “korpi87” broke down what would happen if the Merge were to happen today.
According to his thesis, there are certain facts like the ETH issuance in PoW and PoS, daily fee revenue and the percentage of fee revenue that gets burned due to EIP-1559. After this, the assumption for the number of ETH sold by miners and stakers needs to be factored into the equation.
Once the above is done correctly, the structure supply can be seen as shown below.
Let's confront structural supply and structural demand on daily basis.
PoW:
Daily Sell Pressure: $19M
Daily Buy Pressure: $8.5M
Net: $10.5 of SELL PRESSURE every dayPoS:
Daily Sell Pressure: $0.3M
Daily Buy Pressure: $8.5M
Net: $8.2M of BUY PRESSURE every day pic.twitter.com/t74gmYiCuJ— korpi (@korpi87) June 7, 2022