If you’re feeling swept up in all the hype surrounding the impending Ethereum upgrade, you’re not alone.
Along with all this interest, the price of Ether has also increased. This peaked at two and a half months this morning as it neared $3,350. It is currently trading at approximately $3,406up 6% in the past 24 hours and nearly 19% in the past week.
Why all the hype? Investors might experience a bit of FOMO or be afraid to miss out, Ilan Solot, partner at Tagus Capital Multi-Strategy Fund, a blockchain-focused venture capital fund, says CoinDesk.
“FOMO Kicks Off ETH Pre-Merger.”
So, is FOMO justified? Maybe a little bit.
After all, the merger is “a really big deal,” said Matt Hougan, Chief Investment Officer of Bitwise Asset Management. Fortune. “The market will be evaluating this change for months. If the merger is successful, ETH will be one of the most popular crypto assets for institutional investors for the foreseeable future.
This is what drives all the sensations.
But why all the FOMO?
Ethereum currently relies on something called proof-of-work, in which miners must solve complex puzzles to validate transactions and create new coins. This process requires enormous computer power and is often criticized for its impact on the environment.
With the planned upgrade, Ethereum is moving to proof-of-stake, which would allow users to validate transactions based on the number of coins they contribute, or “stake.”
If it goes as planned, the merger would be an important step for several reasons.
On the one hand, crypto mining on Ethereum would become obsolete, which would significantly reduce the environmental impact of the blockchain. Ether’s post-merger supply would also likely start to decrease, as fewer coins are expected to be issued post-merger, increasing scarcity and price. Blockchain security against potential attacks should improve. And because of all the aforementioned upgrades, institutional investment in the Ethereum network is expected to increase.
All of this has resulted in an increase in the price of Ether, which is reflected in its current jump.
“I think ETH’s recent strong performance is partly due to the anticipation of the merger,” Hougan said.
Lots of hope, but still a risk
An increase in mainstream media attention around the merger may also contribute to the hype and resulting FOMO.
“I think non-crypto natives are becoming aware of the merger for the first time. There really wasn’t much discussion of the merger outside of crypto channels until a few weeks ago,” he said. “Now that the mainstream media is talking about it and institutional investors are hearing about it, people are realizing how important it is.”
While the merger’s potential for success is a source of “understandable excitement,” it should be noted, of course, that it’s not without risk: it’s a very high-stakes technology upgrade. , and there are risks that it will be delayed or that there may be problems in the implementation,” Hougan said.