The ethereum merger is expected to come on September 15, and crypto traders and analysts believe that once the upgrade is released, it will have a strong impact on ethereum prices.
With the merger looming, Ethereum fundamentals seem more solid than ever. Investors are also increasingly speculating about future price movements. The crypto community at CoinMarketCap expects Ethereum to trade at $2,102 by September 30, 2022, a 29.16% increase from the asset’s current price.
Expert opinion: Consolidation is a catalyst for ETH price
Bloomberg analysts discussed Ethereum’s undervaluation in April and issued a $6,000 price target.
Finder.com recently released its latest Ethereum price report. If you hold Ethereum, you should be prepared for high volatility in the next few months. Fintech and cryptocurrency experts predict that the Ethereum price will first rise to $2,673, then fall to $675, and finally reach $1,711 by the end of the year.
However, experts are more optimistic about the long-term price outlook. They believe the ETH price will reach $5,739 by the end of 2025 and $14,412 by December 2030.
Katie Talati, head of research at investment firm Arca , believes that ETH is currently severely undervalued and a catalyst is coming.
Next month, Ethereum will move billions of dollars worth of cryptocurrency, millions of users and thousands of applications onto a new and improved blockchain. This is the result of years of research and development that will eventually culminate in a so-called merger, the actual technical deployment of the Ethereum proof-of-stake chain.
“A lot of people underestimated this event, especially based on the current ETH price appreciation. We will look back in a year and (realize) we are at a (market) bottom,” Talati said.
From Arca’s perspective, Talati has observed an increase in retail interest in cryptocurrencies over the past few weeks. However, she said, “Without new institutions coming in, these will be more important and bigger buyers of [Ethereum].”
There are structural reasons why people expect the price of ETH to appreciate after the merger, Talati said.
“From a financial perspective, the net issuance of [Ethereum] supply will be net negative,” she said. In other words, Ethereum promises to be a deflationary asset that will become more valuable over time.
This is the result of an Ethereum Improvement Proposal (specifically EIP-1559) formulated last year that would burn ETH as part of every successful transaction and change the issuance of Ethereum after the merger.
Users who bet on their assets will not be able to withdraw their assets immediately for at least six months after Ethereum abandons proof-of-work. This, she said, created a “supply pool” that essentially limited the issuance of new ETH that entered circulation.
Add to that the fact that people will now have an incentive to lock their ETH on Ethereum for staking rewards.
“You’ll see the circulating supply of [ether] increase with staking, but it won’t actually be available for sale by individuals,” Talati said.
Some have dubbed this Ethereum’s “third halving,” and these programmatic supply cuts are sometimes thought to push prices higher.
Prominent crypto trading expert Rekt Capital noted in his technical analysis that ETH could soon make a lower high, similar to 2021. “It’s not out of the question, as ETH has recently failed to retest the orange area as support. So there’s a chance that ETH can bounce back to orange to confirm it as resistance,” he said.
Mike Novogratz, CEO of cryptocurrency investment firm Galaxy Digital , said that Ethereum is currently his firmest cryptocurrency trade. A report published in early August said the merger would help ethereum move towards becoming a “global institutional-grade asset,”
Traders in the ethereum options market are already betting on the merger. Calls are much larger than puts, with most traders on major derivatives exchanges choosing strike prices between $1,850 and $2,200.
Ethereum’s call options give the contract holder the right to buy the cryptocurrency at a fixed price, whereas put options give the contract holder the right to sell it at a predetermined price.
Meanwhile, Ethereum’s open interest on Deribit , OKEx, Bit.com and CME has also surged from a low of $2.6 billion in July to around $7.8 billion at current levels. The put-to-call ratio is 1.64, which means traders expect prices to rise ahead of September 15.
Still, there are risks associated with trading. First, the Ethereum merger could be delayed – which would send a “negative signal” to the market, at least in the short term, and then, during or after deployment, there could be the possibility of serious errors, which Risk is difficult to calculate. The Ethereum upgrade has been delayed several times before.
Another risk is that all plans for the proof-of-work algorithm and a possible fork of Ethereum will be preserved. That would disrupt the market, Talati said. Some prominent cryptocurrency companies have pledged to support some PoW forks, such as well-known miner and investor Chandler Guo.
ETH may also face selling pressure once people are able to unlock their tokens. Some people have locked up their ETH for almost two years since the so-called Ethereum 2.0 deposit contract went live with the experimental beacon chain . They also receive capital returns in the form of staking rewards that can be sold for cash or reinvested.
“It’s hard to predict that kind of behavior,” said Talati, who said many of the early stakers were likely long-term ethereum supporters who were less willing to sell.
Investors appear to be aware of downside risks. Talati said ETH put options, contracts that allow people to choose to sell the asset, are “very expensive” in the current market.
CloudTech Group CEO Kevin He made a bearish forecast for ETH price at the end of the year at $750. Still, he expects ETH to hit $5,000 by the end of 2025.
If the Ethereum merger is successfully completed this year, Kevin He expects the price to rise as PoS (Proof of Stake) and faster transactions lead to increased demand for ETH from all different types of stakeholders. If the market situation eases in the second half of the year, ETH prices may rise to or break past previous all-time highs due to increased demand. If the merger does not take place this year, investor confidence in the project and the team will inevitably be damaged by another delay. In a bear market, ETH prices could drop to triple digits, He said.
At least for now, the merger has succeeded in creating a sense of optimism in the Ethereum community. The merger is expected to have a positive impact on the overall price of Ethereum as investments in the coin are more accessible. Additionally, ETH’s appeal to institutional investors may increase due to the benefits of staking.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/will-the-upcoming-merger-be-a-catalyst-for-eth-price/
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