The upcoming Merge update, which will convert Ethereum (ETH) to a Proof-of-Stake (PoS) system, is anticipated to bring about positive results for the cryptocurrency market as a whole. However, it has recently come to light that ETH, itself, might not profit from the network update, according to certain market analysts.
The Ethereum price decreased by 4% during the previous day. Since the coin’s price fell below the $2,000 threshold, there has been a steady downward trend. Despite the anticipation around the merger, assuming Ethereum is able to maintain above its immediate support level, it may not trade close to the $1,300 support level.
Additionally, Meltem Demirors, the chief strategy officer of cryptocurrency asset management firm CoinShares, has suggested that the macro environment, such as high inflation, might discourage new capital from entering Ethereum. She also said it would overshadow the hype surrounding Ethereum’s impending merger to a proof-of-stake consensus mechanism.
Demirors Analyzes The ETH Merger
Overall, the news of the merger aided the July crypto market’s short-term market rise. The September 15 event, if successful, will turn Ethereum into a deflationary asset and could lead to a rise in the price of the cryptocurrency.
According to Demirors, despite The Merge and all these wonderful technological advancements, the Federal Reserve’s monetary policy outlook is ambiguous, which is not what the market was looking for, as is apparent from the recent meetings.
While there is a lot of ebullience or enthusiasm surrounding the Merge, one major problem, in her opinion, is that those who view the Merge as an external catalyst for Ethereum view it as a standalone event.
Additionally, Demirors observed that because of the uncertainty surrounding the post-Merge climate, investors are avoiding risks; as a result, capital in the industry has been raised through options rather than direct exposure.
She also points out that the Ethereum price in its Bitcoin pair (ETH/BTC) is overextended after a gain of more than 50% over the last two months.
ETH Could Retest The $1,500 Level
Since The Merge is still a few days away, a decline in the hype is anticipated. Spirits are expected to soar high again with the beginning of the new month.
Furthermore, it is possible that this will lead to pressure on purchasing and selling, causing short-term holders of the stock to sell their shares prior to the merger, which could cause trouble for ETH in the future.
If this is true, ETH’s price will probably reach the $2,000 mark before the Merge. The market will rise along with rapid ETH buying and staking, just as it did previously, aiding other currencies like Bitcoin to reach their previous highs.
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Source: https://coinpedia.org/ethereum/ethereum-eth-to-melt-due-to-macro-conditions-coinshares/