by BSC News
August 4, 2022
Ethereum made substantial gains over the past weeks as optimism began to trickle into the crypto market after Tim Beiko’s announcement of The Merge.
Ethereum ($ETH) briefly dipped below $900 on June 18 but has since staged a remarkable rally to its current price of $1,600 after Tim Beiko, one of the network’s leading developers, proposed Sept. 19 as the date for “The Merge.”
The Merge is Ethereum’s transition from Proof of Work (PoW) to Proof of Stake (PoS) and is an important milestone for the leading smart contract platform. Ethereum is the second-highest capped crypto asset after Bitcoin ($BTC), and this upgrade will create deflationary pressure to reward its holders by encouraging staking for reward.
Because of its greater investment value, $ETH will be traded less. It is anticipated that after the upgrade, the network will be more energy-efficient and “environmentally friendly,” which is a response to one of the most stinging criticisms of the PoW consensus mechanism.
However, enthusiasm for The Merge is not universal. $ETH has been in oversold territory for a prolonged period. The recent upward price action is a result of the confluence of a few factors. The news on the Merge is one of those. The overall crypto market has also improved and real-world inflation is expected to fall as gas prices are trending lower.
The result in interest rate hikes will also slow the U.S. economy which will effectively bring down inflation. However, these figures do not paint the entire picture of the health of the equities market. The Ukraine-Russia crisis will continue to affect the global market through the disruption of global supply chains, food production and distribution, and crude oil.
The market sentiment has improved after $BTC appears to be consolidating above $22,000. The crypto market is also moving in tandem with the Nasdaq.
Signs of accumulation are starting to appear as investors are slowly buying the dip. Addresses with more than 1 $BTC are increasing after sweeping to lows in mid-June.
Traditional institutions are acknowledging their consumers’ need for Bitcoin exposure. Blackrock recently partnered with Coinbase to provide direct access to crypto trading. The next market cycle will be a continuation of institutional adoption of crypto assets and blockchain technology.
Ethereum ($ETH) - The Merge will create the much needed optimism that will push $ETH past the $2,000 psychological resistance. However this can be a risky trade for a few reasons:
Optimism ($OP) - If Ethereum successfully implemented the upgrade, all layer-2 solutions on the Ethereum network will directly benefit from it.
BNB ($BNB) - This asset is one of the most fundamentally sound coins because it is backed by the biggest crypto exchange platform in the world.
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