The Ethereum merger is one of the most significant events since the emergence of its blockchain and the industry. The event will move the blockchain from proof-of-work (POW) to proof-of-stake (POS). While everyone is waiting for the positive impacts of Merge.
The effect of the transition is already resounding in the crypto market. The market has seen a significant decline in Ethereum prices over the past 48 hours. Moreover, experts in crypto market analysis fear that there will be a further drop in the price of Ethereum after the merger.
While everyone is expecting good results, it is still possible for a hard fork to occur. If this happens, it will negatively affect crypto prices.
Merge Hype May Be Rumored Buy, Sell News Scenario
Ether has already performed better than BTC over the past few weeks, thanks to the merger hype. However, some experts fear that the hype of the merger will have the effect of “buying the rumor and selling the result of the news”.
The event buy the rumor and sell the news occurs in the capital markets. This is when high expectations of merger events or economic reports cause asset prices to rise. The increased prices fall back after the event has passed.
Popular cryptocurrency trader and influencer Lark Davis has spoken about his thoughts on the hype. In his Tweeter, he said the merger is a fundamentally bullish event. Davis outlined the expected features of the upcoming Ethereum outlet. However, he also said they would not make a significant impact immediately.
According to Davis’ analysis, the impact of an increase in fuel efficiency, emissions and all features will only be reflected in the long term. Therefore, he believes the Ethereum merger has the “sell the news” effect.
Another major crypto influencer, Quinten Francios, commented on the merger hype. According to Francios, the Ethereum price after the merger will drop against the Bitcoin price.
Hence, this implies that Bitcoin price will rise while Ethereum price will fall after the merger. He added that the Ethereum price will recover strongly after some time.
Ethereum Merger Won’t Solve Other Fundamental Problems
Experts have explained the reason why the results of the Ethereum merger will not take effect quickly. The transition will change the consensus mechanism from blockchain to POS but will not solve some other fundamental issues. For example, it will not solve the problem of low gas prices or increase network capacity.
It will also not improve transaction speed. A smoothly executed upgrade will not solve the problem of high transaction fees.
Aloe CEO Haward Wu expressed his concerns on LinkedIn regarding the high gas charges in Layer-2s. He said they would only be scalable if enabled by Ethereum throughput.
But Buterin’s four-phase theory can solve these problems. Its data sharing, execution and scaling solutions solve all the problems.
Featured image from Pexels, chart from TradingView.com