Will The Ethereum Merge Skyrocket ETH?

newsbtcPublished on 2022-04-27Last updated on 2022-04-27

Abstract

The Ethereum Merge is the most critical aspect of the ETH 2.0 upgrade, since it will convert from a proof-of-work to a proof-of-stake system. The move from proof-of-work to proof-of-stake...

The Ethereum Merge is the most critical aspect of the ETH 2.0 upgrade, since it will convert from a proof-of-work to a proof-of-stake system.
The move from proof-of-work to proof-of-stake consensus is the focus of the upgrade. The improvement, as previously reported, has been postponed until the end of 2022, with no specific deadline in sight.
The world’s second-largest cryptocurrency was meant to be weeks away from the “merge” a June upgrade of its blockchain Ethereum that would make it faster, cheaper, and less power demanding, promising a meaner and cleaner crypto future.
Ethereum Merge Will Help ETH
Messari’s senior research analyst Tom Dunleavy believes in a report titled “The Decoupling Thesis” that the Ethereum merger will likely be a major turning point in investors’ economic outlook.
He points out that in the past, the crypto market leaders, Bitcoin and Ethereum, had a high positive association with the broader US stock market. For longer durations, the correlation between the two cryptos and the Nasdaq and S&P 500 index was 40-50 percent, while for shorter periods, it was about 90 percent.
Gold and US government bonds, on the other hand, have historically had a negative correlation with stocks. However, this negative link is weakening at the moment. During the 2020 market slump, both gold and bonds, as well as equities, fell.

ETH/USD trades at $2,821. Source: TradingView
“The timeline for seeing this launch continues to extend,” said Brendan Playford, founder and CEO of decentralized financial data platform Masa Finance. She added, “It’s certainly plausible that Ethereum’s highly anticipated upgrade to a proof-of-stake system could be delayed again given that this transition is highly complicated and still uncertain as to whether it can actually deliver on its promise of lowering costs and increasing transaction speeds.”
On April 11, Ethereum declined 8% from $3,215 to $2,947, the day Ethereum principal developer Tim Beiko announced on Twitter that the June deployment had been postponed as testing proceeded. This month, it has dropped 13% to $2,844.
Following the merger, ETH will function as a quasi-government bond. Stakers will put up money in exchange for a fixed rate of return, similar to a bond principle. This will also cement Bitcoin’s status as a form of digital gold.
The Merge May Push The Flippening Forward
Messari has projected that the broader crypto industry would divorce from global markets by 2022. Various segments of the crypto business will continue to gain traction, according to the market research firm.
Meanwhile, predictions that the merger will propel Ethereum over Bitcoin are still circulating. Noelle Acheson, head of market analytics at Genesis Trading, told Reuters that after the merger, more funds will flock to Ethereum.
ETH is currently trading at around $2,850, with a market value of $343.98 billion, while Bitcoin is currently trading at around $38,200, with a market capitalization of $726.69 billion.

A Major Altcoin Prepares for a Sharp Increase in Token Burn

Two governance proposals within the Solana ($SOL) ecosystem, SIMD-550 and SIMD-553, could significantly alter the network's token supply dynamics in coming years. According to 21Shares, if implemented together, they could reduce the total $SOL issuance by approximately $1.4-1.5 billion over a six-year period. The SIMD-550 proposal aims to double Solana's annual inflation reduction rate from 15% to 30%. If adopted, the network's long-term goal of reaching a final inflation rate of 1.5% would be achieved around the first half of 2029, instead of roughly 2032. However, this faster reduction in issuance would also lower staking yields, potentially to around 2.25% by the third year. The SIMD-553 proposal, already approved and integrated into the codebase, introduces a new fee mechanism for computational units consumed in transactions. Currently, about 600-800 $SOL are burned daily on Solana. With SIMD-553, this is estimated to surge to between 7,500 and 9,000 $SOL per day—a roughly tenfold increase in the burn rate. Combined, these measures—faster inflation reduction and dramatically increased token burning—could lead to the projected multi-billion dollar decrease in net token supply. However, uncertainties remain: SIMD-550 is still subject to final voting, and the actual impact of SIMD-553 will depend on the specific fee structure for validators.

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A Major Altcoin Prepares for a Sharp Increase in Token Burn

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SEC sends crypto custody rule overhaul to White House for review